their own, of varying lengths, or suffered slower economic growth. Like the United States, many European countries

also gave direct financial assistance, so-called bailouts, to the institutions that make up their financial markets.

There was good reason to do this. Financial markets bridge the gap between demanders and suppliers of financial

capital. These institutions and markets need to function in order for an economy to invest in new financial capital.

However, much of this bailout money was borrowed, and this borrowed money contributed to another crisis in

Europe. Because of the impact on their budgets of the financial crisis and the resulting bailouts, many countries

found themselves with unsustainably high deficits. They chose to undertake austerity measures, large decreases in

government spending and large tax increases, in order to reduce their deficits. Greece, Ireland, Spain, and Portugal
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