Some European nations have experienced a debt crisis. what caused this crisis?

In simple words, some European countries have spent more than they earn. Countries like Greece have taken huge loans to fund their spending and they are unable to pay back. Their own banks and neighboring countries like Germany lend money to them. When the government's default's on loans, banks get into trouble and there are a lot of cascading implications due to this.

Bank Loses. During the credit crunch, many commercial European banks lost money on their exposure to bad debts in US (e. g. subprime mortgage debt bundles) Recession. The credit crunch caused a fall in bank lending and investment; this caused a serious recession (economic downturn). cause of recession Fall in House Prices. The recession and credit crunch also led to a fall in European house prices which increased the losses of many European banks.

the recession caused a rapid rate of goverment

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