Accountability, Representation and Control Essay

Being unaware about issues on the other side of the world made me realize on intriguing economic debt crisis that is going on in countries that seem like they are holding together. Greece and the European was a great issue to discuss and view both sides before since I was unaware that there was a long going crisis going on in this side of the world. Greece can either get a so many bailouts repeatedly or they can fend for themselves to find how the country is able pay back the debt they owed the EU within the past years. In my opinion, I think that Greece should give the money from the EU to survive.

The financial papers rarely tell the full story. The numbers are staggering. Greece owes a total of $271 billion. 60% is owed to the Eurozone banks, 10% to the International Monetary Fund, 6% to the European Central Bank, and the rest (24%) is listed as “undefined” or “other”. I find this strange since 24% of $271billion is over $65 billion, which is an enormous amount of money to refer to as “undefined”.

As Europe slipped into recession in 2009, a problem that started in the banks began to affect governments more and more, as markets worried that some countries could not afford to rescue banks in trouble. Investors began to look more closely at the finances of governments. Greece came under particular scrutiny because its economy was in and successive governments had racked up debts nearly twice the size of the economy. The threat of bank failures meant that the health of government finances became more important than ever. Governments that had grown accustomed to borrowing large amounts each year to finance their budgets and that had accumulated massive debts in the process suddenly found markets less willing to keep lending to them. Hence, what had once begun as a banking crisis became a sovereign debt crisis.

Due to the confines of the Eurozone 's monetary policy, Greece and several other countries were unable to ease the effects of the crisis through independent monetary policy. The consequences were large government debts amounting to €323 billion1 in Greece alone.

On 21st February 2012, EU Finance ministers and the IMF approved a second bailout for Greece, the largest in history, worth 130 billion Euros. The deal included a 53.5% debt write down for private Greek bondholders (A write-down is the reducing of the

Two bailouts later, with the third quickly approaching, Greece has shown the European Union that its austerity measures are not a viable or sustainable option for debt relief. With the spiraling decline of investor confidence in an economy severely trapped by debt, Greece has been under threat of being dismissed from the European Union. As of July 14, 2015, Greece’s third European Union bailout was left just out of arms reach until the nation follows through with, what has been termed ‘Draconian,’ reforms aimed at minimalizing Greece’s debt. Although Greece makes up just 2% of the European Union population, its weighted economy and potential impact on the global economy is on everyone’s mind.

However, in 2009, Greece started to hit the crisis as it is indebted heavily to eurozone countries and become one of three eurozone countries that have gone under two bail-out. Although the Greek economy is relatively small with direct damage of it defaulting on its debts may be soaked up by the eurozone (Financial Times, 2012). The need of financial support from EU and the IMF was requested in 2010 as a loan of 45bn. According to Carmen Reinhart - Co-author of This Time is Different; she believed that it was difficult for Greece to get out of the crisis without restructuring. The problem of the Greek crisis is involved with fiscal problems, which can be income problem, profiling problem, servicing problem or balance sheet problem. As the government took benefit from the growth, they ran a large structural deficit. The restructuring happens more slowly with the support from the EU and IMF, therefore, the private bank from France, Switzerland, etc. which gave a loan to Greece, are not distressed with a huge haircut. As a result, Greece owned the IMF 28bn Euros, the EU 74bn Euros and had a market debt of 262 bn Euros, according to JP Morgan. From 2000 to 2008, the Greek budget deficit was 5.1% as a real number instead of 2.9% of GDP (Marzinotto et al. 2010). In 2009, George Papandreou won the election with his promise of spending more on social causes and trying to reduce the loan that Greece faced. A short time

The IMF and EU have loaned vast sums to the Greek government, aiding in an economic recovery for the nation. These institutions, along with the European Central Bank (ECB) and many other creditors within the EU have set out fiscal and monetary guidelines that will see the loans be of most use to the economy. Through poorly regulated finances, Greece was facing government bankruptcy prior to the 2010 bailout. These funds have not only saved the government, but an entire nation. As of the 27th of April 2015, Greek public debt stood at 320.4 billion euros (€), with a debt-to-GDP ratio of 180.2 percent. Although this figure is astoundingly large, the policies put in place by creditor institutions mean the debt is manageable, and will be reduced significantly over a period of years. Austerity measures

Background on Greece’s Debt Crisis “You cannot spend more than (what) you earn…you should not borrow more than (what) you can afford.” This, according to an editorial published by the Greek newspaper Kathimerini, may be the lesson Greeks are now learning the hard way.1 Unrestrained spending of successive Greek governments over a long period may have driven the country’s budget and current account deficits.2 Greece borrowed heavily from international capital markets to finance public sector jobs, pensions and other social benefits.3 As deficits and the country’s debt burden grew, the governments just kept on borrowing. 4 When Greece joined the eurozone in 2001, it gained monetary stability and was able to borrow at lower interest rates –

The introduction of the euro also allowed Greece to borrow money due to the lowered interest rates. In 2008 when the global financial crisis took place, two of the country’s largest industries, tourism and shipping, were badly affected. This resulted in the countries revenues dropping by 15%, and the beginning of a fall into an irrecoverable debt. In order to keep within the monetary guidelines of the EU, Greece has been discovered to have deliberately misreported the official economic statistics of the country. It was found that Greece paid banks, such as Goldman Sachs, hundreds of millions of dollars to hide the true level of borrowing which took place (ABC News). This then enabled Greece to spend beyond what it was ‘permitted’ to, and hiding the actual deficit from the financial leaders overseeing the spending of the EU countries. Due to this over-spending and running on a false economy, Greece has plunged itself into an incomprehensible debt worth 113% of their GDP, which is equivalent to over $250 billion (CIA World Factbook). As Greece was without a bailout agreement, it was likely that they would have to default on some of their debt, meaning that it would not be paid on time, and potentially not paid at all. Economic analysts stated that there was somewhere between a 25%-90% chance of them being forced to default. This would result in Greece only paying back 25%-50% of what they owed, and this would effectively remove Greece from the euro, as they would no

government borrowed heavily from abroad to fund substantial government budget and current account deficits. Between 2001, when Greece adopted the euro as its currency, and 2008, Greece’s reported budget deficits averaged 5% per year, compared to a Euro zone average of 2%, and current account deficits averaged 9% per year, compared to a Euro zone average of 1%.7 In 2009, the budget deficit is estimated to have been more than 13% of GDP. Many attribute the budget and current account deficits to the high spending of successive Greek governments. Greece funded these twin deficits by borrowing in international

In 2010, the IMF, along with European Central Bank and the then-sixteen members of the European Union, drew up an economic bailout package in the form of €110 billion loan to ‘rescue’ Greece from “sovereign default”—i.e. Greece’s inability to pay back its existent debt. This action was a response to the growing fear of default from (mostly private) investors around the time of the Great Recession and resultant European debt

Greece has been in the news since for all the wrong reasons and has been at a centre stage of Biggest Financial dramas in recent times. Being on the cusp of Euro exit or “Grexit” what the economists and finance enthusiasts call it, Prime Minister Tsiparas has softened its stance after a rancorous debate and finally accepted the bailout terms of 85 billion Euros for three years. But would that be enough? Or in three more years another crisis and revolt of a more catastrophic nature would crop up? Would it be better for Greece to leave the Euro now or should they better had left right before in 2011 itself? And most importantly, Would Greece be able to pay out its debt obligations or should the IMF and other creditors give some debt relief to Greece? While these

Currently the PIIGS (Portugal, Ireland, Italy, Greece, and Spain), whose GDP ratios are all well over 100%, are in danger of sinking the ship from the amount of debts they cannot pay (Cannon). The projected debt for Greece alone is 300 percent of GDP by 2060 according to IMF economists (Thomas). There have been riots, especially in Greece, which has fallen into yet another

The Greek sovereign debt crisis highlighted issues with government expenditure and revenue spending. Budget deficit figures for 2009 were revised to 15.4% of the nation 's gross domestic product. Greece decided to undertake debt financing and large scale borrowing in the absence of a government surplus. This resulted in debt levels