Demystifier: An ED Original where we take a complex topic but the content is written in such a way that it is knowledgeable and easy to comprehend at the same time.

The Greek Crisis has killed the economy for generations to come. The crisis has gone on for so long that those who could once help are also suffering. As some reports say, there seems to be no light at the end of the tunnel.

What’s The Latest?

Tensions over Greece’s third bailout has grown as the IMF has warned that the country’s debt is unsustainable. This has forced Prime Minister Tsipras to implement deeper tax and pension reforms even as he faces domestic pressure over a weakening economy and rising poverty. The Greek people have protested vehemently over it.  One of the posters goes like this,

“Tell me, how can anyone survive on a basic wage of €490 (£438) and still pay all the taxes they have passed.”

Also read: What Is A Guesstimate? Here’s All That You Need to Know

Why Did The Crisis Happen?

Within weeks after becoming prime minter in 2009,  Papandreou revealed that Greece’s budget deficit will exceed 12 percent of GDP, nearly double the original estimates. This simply happened because Greece had been hiding it’s  huge deficit for years and years before to prise off investors from other countries. The bubble had finally burst.

What Happens If Greece Defaults?

A Greek default would make the Greece banks go bankrupt without loans from the European Central Bank. Losses would threaten the solvency of other European banks, particularly in Germany and France who have billions of loan to Greece. They, along with other private investors, hold around 34.1 billion euros in Greek debt.

If Greece has received billions in bailouts, why has there still been a crisis?

The money was supposed to buy Greece time to stabilize its finances and quell market fears that the euro union itself could break up. While it has helped, Greece’s economic problems have not gone away. The economy has shrunk by a quarter in five years, and unemployment is about 25 percent.

The bailout money mainly goes toward paying off Greece’s international loans, rather than making its way into the economy. And the government still has a staggering debt load that it cannot begin to pay down unless a recovery takes hold.

What Happens If Greece Leaves the Eurozone?

Without an agreement, Greece would abandon the euro and reinstate the drachma. That would end the hated austerity measures. The Greek government could hire new workers, reduce the 25 percent unemployment rate and boost economic growth.

“Uncertainty is the new normality,” psychology professor Fotini Tsalikoglou noted. “It could manifest itself in apathy, violence, more uncertainty, we just don’t know.”

One can only hope that Greece gets out of this mess as quickly as possible.


Image Credits: Google Images

Other Recommendations:

http://edtimes.in/2017/11/what-is-forex-hedging-and-why-is-it-the-need-of-the-hour/

http://edtimes.in/2017/10/what-is-a-futures-contract-heres-all-that-you-need-to-know/

LEAVE A REPLY

Please enter your comment!
Please enter your name here