Greece’s Economic Turmoil and the Global Economy

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Greece’s Economic Turmoil and the Global Economy The financial headlines of 2012 were prevalent with the tribulations of the Greek economy. Its problems, in the eyes of many of the other nations of the euro zone, were not only negatively impacting the prosperity of the Greeks, but also the viability of the European Union. The country as a whole requires a major restructuring. Not only are drastic changes needed in financial and economic policies, but the Greeks need to understand their attitude of government entitlements cannot be sustained. The mismanagement of the Greek economy is also evident in its place in the global market community. It has not found the path that a county needs to follow to become an active member of the vibrant,…show more content…
Since Greece is a small open economy, a weakened currency through devaluation would have helped to improve the competitiveness of Greek goods on the world market without a cut in domestic prices or a reduction in wages. The price of foreign goods would rise and this would help boost demand in the lower priced domestic products. This kind of policy would come at the expense of other countries in Europe, and it would ultimately prompt other nations to devalue their currencies, leaving everyone in a worsened economic situation (DeVore).
Other reasons for the Greek crisis lie in the political bankruptcy and leadership failure, which always come before the financial factor that can result in the collapse of the Social Contract that binds the people with their government. Social Contract is an agreement among the members of an organized society or between the governed and the government, defining and limiting the rights and duties of each. An important consideration when analyzing Greece’s problem is that it is suffering from the inability to implement policy, manage public finances, collect taxes, and open its markets to compete in the global environment. The complexity surrounding these issues can create opportunities for corruption that can further undermine the Greek citizen’s confidence in the system. Greece needs to focus on re-establishing the Social Contract between the Greek population and the state which needs to be based on trust and solidarity
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