The European sovereign debt crisis (2009-2010): The role of confidence and other social factors / La crisis de la deuda soberana europea (2009-2010): el papel de la confianza y otros factores sociales

Abstract

In this paper I analyze the second phase of the current financial crisis or the events that rocked the European economies in 2009-2010. These events were set off by Greece’s declaration in October 2009 that its deficit would be much higher than what had previously been announced; and it culminated in the May 2010 crisis, when EU put together a fund of a trillion dollar in order to calm the markets. The crisis is currently ongoing (and my paper takes it up till November 2010). The European sovereign debt crisis is primarily analyzed with the help of a sociological theory of confidence. The argument is (drawing on Bagehot) that financial crises may be unleashed by the sudden disclosure of hidden losses - in this case (as I document) the disclosure of Greece.

Keywords

• Financial crisis
• Eurozone
• sovereign debt crisis
• Greece