The European Financial Crisis

CHAPTER 6

Misperception of European Risk, Market Reactions, and Policy Response: A Timeline of the Euro Crisis

Introduction

The world financial crisis of 2008 created a focus on fundamentals. The experience, one still ongoing reminded the world that details matter, whether the details involve the quality of mortgages being used as underlying assets in mortgage-backed securities during the U.S. financial crisis, or the organization of a currency union and the underlying structure of the economies involved during the Euro crisis. In many ways the world before 2008 was one dominated by optimism, and optimism made it easier to ignore messy details of all sorts, including the structure of the European monetary union, its underlying trade and credit ...