The Greece Crisis : Tragedy Or Opportunity?

811 WordsFeb 22, 20164 Pages
The Greece Crisis ? Tragedy or Opportunity? Ram Subramonian (Buckeye Cohort), FT MBA ?17 How did Greece get into this difficult situation? Whose fault was it? Greece?s affair with the Euro began with huge hopes when it joined the multi-national currency zone in 2001. The, it went horribly wrong after that. At its core, the problems that face Greece today are to do with an economy reeling in debt and low productivity and in which, revenues don?t offset the massive piles of debt. So how did Greece get into this difficult situation? Who is to blame? A deeper reading of the case reveals that a host of factors (some of them rooted in Greece?s somewhat turbulent past) led to the difficult situation it finds itself in today. In this analysis, I will classify the factors into four broad categories based on the PEST model: Political Factors: Tensions between the left and right wing politicians leading to a military coup, which undid many of the benefits that were reaped due to the fiscally and monetarily conservative policies of the 1950s Populist policies that included increasing government spending, nationalizing companies and government interference in the Bank of Greece, led to public debt rising to 89% of the GDP in 1990 No political will to reign in public spending (increasing retirement age and simplifying Greece?s complex pension system) Economic Factors: Huge structural problems existed in the Greece economy. The World Bank?s Doing Business Report ranked Greece 109 out of
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