The Financial Crisis Of Greece And Portugal

housing market in 2008, which I will go into more detail about later, created a domino effect which spread to almost every major Westernized economy, including Greece. Michael Lewis, author of The Big Short, and many Vanity Fair Magazine articles, including “Beware of Greeks Bearing Bonds” has extensively researched the recent world economic downturn in 2008, attributing the cause to a combination of overconfidence in the housing market and complicated financial trickery by big investment banks like Goldman Sachs, Lehman Brothers, and others. In “Beware of Greeks Bearing Bonds” Lewis writes in relation to corruption within Greek government, “Here, in 2001, entered Goldman Sachs, which engaged in a series of apparently legal but nonetheless repellent deals designed to hide the Greek government’s true level of indebtedness. For these trades Goldman Sachs…carved out a reported $300 million in fees” (Lewis, 13). Along with teaching Greek government to hide their nation’s debt, Goldman Sachs also taught them to identify sources of future income and turn those resources into cash which they could spend however and whenever they pleased, often putting much of the money into their own pockets

On January 1st 1981 Greece joined the European Communities ushering in a period of sustained growth. The countries widespread investments on infrastructure coupled with funds from the European Union led to a sharp increase in revenue from tourism and the service sector. This helped the country reach historical highs in their standard of living. By 2001 Greece had adopted the Euro and in the proceeding 7 years the GDP per capita went from $12,400 in 2001 to $31,700 in 2008, an increase of 156%. The Greek government was encouraged by the European Central Bank and other private banking institutions to

The article “How Germany Prevailed in the Greek Bailout” discusses Germany’s successes financially in comparison to most other (19 countries) in Europe. Although Germany has such success others see the country as a bully almost due to their militaristic background even though they have come to the aid of Greece and helped. Many other European countries are hesitant about Greece receiving aid considering the countries past failures financially. This is not the first time the country has been in debt and undoubtedly will not be the last. Since the economy fell in 2008 Greece’s unemployment rate is about 22% which is double the U.S. Due to an imbalance in European countries where some are creditors and others debtors it is difficult to fix this

Greece is one of many countries that have had its vicissitudes that have occurred frequently throughout history. There have been multiple leaders, wars, debts, and losses that have been recorded through history. Although Greece has had its many eras, “Each era has its own related sphere of interest.” (History of Greece). The complications that originated in ancient Greece are now reoccurring in present day to an extent. Fortunately, Greece is a country that is very strong; they are not afraid to fight for what they feel is right. It also helps that Greece stays out of any worldly dilemma that does not have anything to do with them. Of course, there have been times in which Greece has been defeated or taken advantage of, but the country did

Before the crisis, in order to be a part of the Eurozone, countries had to have budget deficits less than 3% of their GDP, national debt less than 60% of their GDP, and inflation rates within 1.5-2% of the economy with the lowest inflation rate in the Eurozone. However, these were not strictly enforced, obviously, as Greece got away with it in extreme measures with no penalty. According to Michael W. Bauer and Stefan Becker, due to the crisis, “there have been crucial changes to all procedures that steer national economic and fiscal policies,” and, “it improves the stringency of EU economic policy-making, providing clear timelines and combining ‘hard’ and ‘soft’ measures” (219). In theory, this should significantly improve the system, as the crisis likely never would have happened if the Eurozone qualifications had been strictly enforced.

The Golden Age of Greece is well known for its sculptures, buildings, rulers, and philosophies. Today, modern Greece is known for having economic crisis's as well as political turmoils. Greece's problems began when they joined the European Union. Greek drachma was officially replaced by the euro when they joined. Greece approved the euro in 2001, not knowing what they were getting in to. When the Prime Minister Konstantinos Karamanlis came to power he realized that the budget deficit was not 1.5%, but 8.3%. That outstanding amount greatly hurt the economy. By 2008, Greece's tax collection crumpled and unemployment was at an all time high. Unfortunately, by 2014, 30% of Greek's population did not have a job (Greece Debt Crisis). In contrast, today's Greece is a complete different from the Golden Age. Greek unemployment soared as austerity took its toll.

As far as Greece’s role in creating this crisis in the first place, it can be said that Greece is at fault for a variety of reasons. The media has been focusing on the corrupt political system and infrastructure, the lack of competition in the private sector, the wastefulness and inefficiency of the public sector and a flawed tax system as causation for this mess. When the public sector was expanded in the 1980’s, Andreas Papandreou was given various agricultural subsidies and grants to do with what he pleased. This enabled the funding of certain post-World War II groups to heal political wounds and fund unions and other special interest groups to aid his political capital and strength. The policies enacted in this decade allowed for the increase in power and funding of the middle class by creating a vast amount of inefficient public sector government jobs for citizens. This resulted in an increase in the levels of inefficiency, bureaucracy, corruption and wasteful spending coupled with the increase in wages, pensions and benefits. This proceeded to drain through government money and resources, and did not breed a culture of highly motivated, efficient and effective government employees. A high amount of debts accumulated as the nation continued to proceed in this way, using state money to subsidize failing businesses

The roots of Greece’s economic problems extend deep down into the recesses of history. After the government dropped the drachma for the euro in 2001, the economy started to grow by an average of 4% annually, almost twice the European Union average. Interest rates were low, unemployment was dropping, and trade was at an all-time high. However, these promising indicators masked horrible fiscal governance, growing government debt and declining current account balances. Greece was banking on the rapid economic growth to build upwards on highly unstable foundations. In 2008, the inevitable happened – the Greek debt crisis.

On January 1st 1981 Greece joined the European Communities ushering in a period of sustained growth. The countries widespread investments on infrastructure coupled with funds from the European Union led to a sharp increase in revenue from tourism and the service sector. This helped the country reach historical highs in their standard of living. By 2001 Greece had adopted the Euro and in the proceeding 7 years the GDP per capita went from $12,400 in 2001 to $31,700 in 2008, an increase of 156%. The Greek government was encouraged by the European Central Bank and other private banking institutions to undertake loans to fund foreign infrastructure projects like those related to the Olympic Games of 2004. When the financial crisis

This paper will provide a brief history of Greece and reviews the modern day problems that may force Greece out of the Eurozone. Indeed, history is being made on a daily basis as the prospect of a Greek exit would steer both the nation and the Eurozone into uncharted territory. This is a cautionary

As a country Greece always struggled with its finances. In the 1990s, it consistently ran significant budget deficits while using the Drachma (the former currency of Greece). Because of this, Greece joined the European Union in 2001 which was two years later than other nations. After joining the EU, Greece had a time of prosperity. This did not last too long as a financial crash occurred in 2008. This affected other countries in the EU, but Greece was hit the hardest. In the time before joining the EU, if a situation such as this occurred, Greece would print more currency, boosting the economy . However, since the Euro was controlled by the European Central Bank (ECB), this was not an option. Unemployment was soaring all over Greece. This was worse than the unemployment in the United States during the Great Depression . Most affected were the younger adult population. Besides from unemployment, Greece had an issue with uncollected tax receipts. Greece had more tax debts than any other country in the EU.

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

The involvement of the “troika” i.e European Commission, European Central Bank and International Monetary Fund has helped Greece for two major bailout loan programs but in exchange has been dictating their domestic policies. Policies ranging from tax reforms, they have controlled wage cuts to the changes in regulations of even small domestic products. Failure to comply with Troika members may lead Greece to face a major default and may also lead to Euro exit but on the other hand upholding their policies is crushing the economic growth

Greece has many historical aspects such as the acropolis where many polytheistic worshipers came to worship the Gods, the first Olympics, as well as the first democracy, however one question that the whole world is asking is “will Greece’s debt soon be history”? The prime minister, Alexis Tripras, is unwilling to pay of the billions of euros of its debt. Germany and France has loaned billions of euros and are now trying to create a plan to solve this problem. The International Monetary Fund, European Central Bank and other organizations have declined all of Greece’s request for more loans. Although the majority countries in the world have debt, Greece has been loaned billions of euros from many european countries, the EU, and other international organizations; this is a problem because this country is doing all in its power to accept more grants, unwilling to give the overdue credits back.

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