The Future of the Euro zone and U.S. Interests Case Study

The Future of the Euro zone and U.S. Interests - Case Study Example With the threat of default the markets started in claiming exaggerated interest rates against their bonds. This grave concern entailed enormous risks and uncertainties enthralled to the banking system of Europe and simultaneously the viability of the euro. The staggered growth in the Euro zone with mild recessionary forecasts in 2012 leads to the enhanced problems in the banking systems. One of the significant causes of the crisis results from the loopholes in the architecture of the currency union along with the fact that EMU provides a provision for a common central banking structure. The weak enforcement of the dynamic fiscal discipline resulted in the rising of the public debt in some of the Euro zone countries. Trapped in the euro, the individual members find it difficult in inflating their way out of the huge public debt or make an endeavor in devaluing their currency in order to make their exports more competitive in the trading platform (Ahearn et al, 2012). The paper will se ek the problems faced by the US corporations in Greece in accordance with the euro zone debt crisis and will focus on the case study approach involving analysis which will direct towards the policy implication paradigm which will state that whether the US corporations along with their joint ventures will withdraw from Greece or not. Adverse signaling starting with Greece and the present situation The Euro zone crisis began in early 2010 at a juncture when the financial markets were jeopardized with its herald in Greece. Fears generated and signaled that the default in Greece was an adverse indicator for other Euro zone countries. There was delayed response from the stabilization policies for the renewal of the crisis period. Extended negotiations resulted in the intervention of the International Monetary Fund (IMF) in 2010 in supplying a fund of â‚ ¬110 billion loan for Greece along with a wider stabilization fund booster for the other Euro Zone countries for the requirement of t he loans. In a quite recent European Union (EU) summit on December 8-9, 2011, the leaders of the European Union declared a jolt of new policy measures which included fiscal compact as well as bilateral lines of credit from the European countries to the IMF for addressing the critical position of the Euro Zone Crisis (Ahearn et al, 2012, p.1). Threats for the US corporations A very serious concern which crept up among the United States (US) is that the aftermath of a sovereign debt by Greece or the massive collapse of any European financial institutions was forecasted with the wave of credit freeze-ups in to the US resulting in the devastations in the US stock market and the economy. Another additional concern of the United States is regarding the staggering down of the Euro zone economy with the depreciation of the euro which will in turn affect the exports of the United States and hence the earnings of the companies of the US companies (Ahearn et al, 2012, p. 3) . Possible frontier s of the Euro zone crisis The Euro zone crisis is thought to have severe effects on the US economic and political interests in varied ways. One of the major concerns in the US is that a sovereign default by Greece or the breakdown of the financial institu