europe crisis Archives » Pinoy Money Talk

Cyprus Financial Crisis: A simple explanation

Up until a week ago, investors were in euphoria because stocks were reaching new all-time highs. On March 14, 2013, the Dow Jones closed at a record 14,539.14 — a level not seen since pre-subprime mortgage crisis of 2007. Philippine stocks, meanwhile, continued its upsurge, ending at its all-time best of 6,835.21 on March 7, 2013.

And then last week, the market reversed. After reaching a new all-time high, the Dow Jones slid and was unable to return to record levels. The Philippine Stock Exchange index suffered a decline and, as of yesterday, registered its eighth consecutive day of losses.

What happened, you ask? Blame it on the Cyprus financial crisis.

Moody’s downgrades UK sovereign credit rating

While traders and investors in the Philippines rejoice over all-time highs in the stock market, favorable economic conditions and positive consumer outlook, the opposite seems to be the state of norm in the Eurozone area — with more news of recession, austerity programs and credit rating downgrade coming from that part of the world.

The latest in the recent spat of bad news from Europe is the announcement of ratings agency Moody’s that it is downgrading Britain’s sovereign credit rating for the first time in the country’s history.

The “Greek Debt Crisis” explained

Financial markets worldwide are still on a decline and are being dragged supposedly because of the Eurozone debt crisis. Foremost among these problems is Greece — a country of 11.3 million people with external debt reaching more than $500 billion — currently at the brink of debt default.

What exactly happened? What led Greece to reach this unenviable position? Why are Greek people protesting?

Here’s a simple explanation of the Greek debt crisis.