Greece 's Macroeconomic Crisis : Causes And Effects On The European Economy

Ever since the end of 2009, Greece has been involved in a financial and economic crisis that has been record breaking and shattered world records in terms of its severity and worldwide effects. The Greek government, since the beginning of the crisis, has attempted to take several governmental measures to try and “stop the bleeding,” including economy policy changes, dramatic government spending and budget cuts and the implementation of new taxes for citizens. In addition to this, the government has tried to alter the perceptions of Greek government and economy by the rest of the world in an effort to appear both more liberal and more democratic. Greece has also been working to privatize many previous

In this research paper, we will be covering the causes, financial repercussions and social implications of this crisis. We will also be examining the methods used by the Greek government to rescue the economy. To conclude, we will discuss possible resolution measures and objectively forecast the future

(Pavlakis, 2013) With so much to lose we have seen European “bailout” agreements that mostly front the Greek government more money coupled with crippling austerity in an effort to “rebuild” the economy. Austerity discourages growth as it cuts the spending of the government who is by far the biggest spender in the economy. (Kentikelenis et al., 2011) The effects of austerity can be devastating, but the true effects are often hidden beneath the messages we get from mainstream news sources. The stereotype of the Greek people as lazy and tax evading has desensitized the public and has made austerity seem like more of a sensible option. The media messages have made strict austerity measures seem justified and in effect have galvanized the Greek people.

The economic crisis of 2008 in New York had ripple effects around the world, causing deep structural problems within the European Union to crumble the economies of several countries. These countries, known as the PIGS, are made up of Portugal, Ireland, Greece, and Spain, and collectively hold most of the sovereign debt problems of the European Union. After fast growth early in the decade, these countries were spending too much money and not securing their own banking sectors with enough capital. Soon, the debt the PIGS owed caused massive problems throughout the EU, and Germany and France had to come to the rescue of these poorly managed countries. (Greek Crisis Timeline, 1) Now, in 2012, the issue has yet to be fully resolved. Greece is still sinking, and a massive bailout for Greece's banks is required. The debate is whether Germany should continue bailing out Greece and collecting interest on its loans, or whether Greece should try to separate itself from the broader European Union, in an attempt to manage its own finances and declare bankruptcy in order to save itself from crippling interest payments. Each path offers an escape from the present situation that Greece finds itself in, but only the path of bailout results in a harmonious European Union. If Greece fragments off from the EU, then the entire union is weakened as a result. I believe that Greece should accept the terms of the bailout that Germany has provided, and should undergo several years

In the early-mid 2000s, Greece 's economy was strong and the government took advantage by running a large deficit. As the world economy cooled in the late 2000s, Greece was hit especially hard because its main industries—shipping and tourism—were especially sensitive to changes in the business cycle. As a result, the country 's debt began to pile up rapidly. In early 2010, as concerns about Greece 's national debt grew, policy makers suggested that emergency bailouts might be necessary.

Although a commonly accepted view is that the hidden budget deficit in Greece is the beginning of the European sovereign debt crisis, the real causes of this economic crisis can be various. To reveal the whole event, a comprehensive review of the background is

To start off, Europe (as a political entity) is in a major economic crisis. The IMF (International Monetary Fund) was set up after World War Two in order to rebuild Europe and other countries of the world. The eurozone and Greece have been at a gridlock since the Greek economy has dropped so significantly. As stated in the article, (paraphrasing here) the eurozone will only give aid to Greece if the IMF agrees to give them funds as well (pushed by several countries in the European Union). The IMF is refusing to help bail out Greece any further until it is certain that Greece will uphold the terms of the bond agreements. In February, both the IMF and the eurozone agreed to subject Greece to more measures to ensure that Greece meets its

The burden of debt in the European Union, especially in Greece and Ireland, is detrimental to the continent's economy and people. Not only is it an issue throughout Europe itself, but it has become a dominant issue in global economics as well. As these European governments struggle to get back on their feet, the fate of the euro is clinging for life. It has become clear of the extremely high deficits, some at over 100% GDP, which are attached to several EU countries. This European crisis is a continuation of the global financial crisis, but also an issue

There is a science to it. There are many reasons one may attribute to this. One of them is that after falling into the crisis the weaknesses of the economy gets exposed. These weaknesses may or may not be the reasons for the emanated crisis but surly they now grab the eyeballs. Due to the crisis the policy reforms get speeded up and measures are taken to tackle the weakness. In situations where financial deficit take place austerity measures work. These measures have great impact as the spending of the government reduces the fiscal deficit to huge extent. This is what the Greece policy reforms are working at. During crisis, the measures aim to immediate relief and also long term solutions to current problems. This kind of strategy has a great impact. To provide immediate relief some stress is put on the economy but the long term now looks safe. In the long run when the economy recovers the stress is relieved. This kind of policy reforms was used in America in the last recession. The idea was to print money and inject them into the economy to boost spending; when the economy would recover the policy would be to draw the excess money. The idea here was not a defensive move but more of an aggressive policy reform. It has been seen throughout history that protectionist attitude leads to aggregating the crisis and taking it into deeper zones of trouble while aggressive reforms boost the recovery process. There is a saying- ‘Fortune favours the brave”. Here it holds

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

This section aims to discuss the root of two aspects of the Greek debt crisis.

Since October 2009, Hellenic Republic has been experiencing effects of the recent money turmoil and also the temporal order of the response of Europe to the Greek business crisis. a lot of specifically, the Eurozone Governments did not provides a clear signal indicating their readiness to support Hellenic Republic, whereas the Greek business crisis was escalating. Legal skepticism and queries like “are bailouts illegal?” were raised, principally by European country, for a problem that was partially political.

The Greek exit from the European Union “Grexit” was something that was coined in 2012, due the numerous problems they was facing. The problems emerged in the late 90s. When Greece joined the euro it meant that barriers of trade were reduced between member states. However. Greece had higher labour costs relative to other EU countries and this meant that Greece was not competitive in the market. During the early 2000s Greece saw its debt burden continue to grow due to a current account deficit (i.e. demand was higher than the absorption of GDP). Greece debt was large because the country was borrowing to finance its budget deficit.

In late 2000 due to financial crisis the Greece largest industries, tourism and shipping, were badly affected. The Greece had joined the group knowing that it would be easier for it to get the debt with a globally strong currency Euro. The Greeks continued lavish spending (events like Athens Olympic which are reported to cost Greece several times more than the estimated cost, public care) combined with long following trade deficits and large tax evading population lead the Greece budget deficit and public debt to rise to insurmountable amount. And now, the deficit percentage and the debt to GDP ratio for the Greece are highest among

In 2008, Greece was seriously affected by the subprime mortgage crisis and it was unable to recover from this crisis. In 2009, Greece admitted its budget deficit would be 12.9% of GDP. That 's more than four times the EU 's 3% limit. Afterward, Greece was prevented from borrowing in the financial markets.