The European Sovereign Debt Crisis (2010-2012)

The European Sovereign Debt Crisis from 2010 to 2012 nearly shattered the eurozone as Greece, Portugal, Ireland, and Spain teetered on default, with austerity measures pushing unemployment above 25% in Greece and Spain. It triggered social unrest and exposed structural flaws in the currency union, with Greece's GDP contracting by 25% over five years. Compared to The Asian Financial Crisis (1997)'s Asian Financial Crisis, which relied on IMF bailouts, this crisis faced slower institutional responses, making it 13% costlier in terms of output lost. With yields on Greek bonds spiking to 30%, it remains a cautionary benchmark for how sovereign debt risks can outpace the average fiscal rescue, leading to 300 billion euros in external aid.