Greece - Debt Crisis Essay

Words: 913
Pages: 4
Open Document
Background on Greece’s Debt Crisis “You cannot spend more than (what) you earn…you should not borrow more than (what) you can afford.” This, according to an editorial published by the Greek newspaper Kathimerini, may be the lesson Greeks are now learning the hard way.1 Unrestrained spending of successive Greek governments over a long period may have driven the country’s budget and current account deficits.2 Greece borrowed heavily from international capital markets to finance public sector jobs, pensions and other social benefits.3 As deficits and the country’s debt burden grew, the governments just kept on borrowing. 4 When Greece joined the eurozone in 2001, it gained monetary stability and was able to borrow at lower interest rates – …show more content…
8 “Is Greece Heading for Default?,” Oxford Economics, January 29, 2010. 9 “Q&A: Greece's financial crisis explained,”http://edition.cnn.com/2010/BUSINESS/02/10/greek.debt.qanda/index.html 10 Congressional Research Service. “CRS Report, Greece’s Debt Crisis: Overview, Policy Responses, and Implications,” April 27, 2010.

previously released by the Greek government in October 2009. This further increased investor nervousness and revived questions about Greece’s ability to repay its debts.11 Greece’s debt is estimated at 300 billion euros with part of it maturing in mid-May 2010. Despite austerity measures and sales of additional Greek bonds, fears of a possible default continued to spread along with speculations on other courses of action the Greeks may take. Greece: Current Economic State Between 2000 and 2007, the Greek economy grew as GDP increased by about 4.0% per year. However, the growth dropped to 2% in 2008 and contracted by 2% in 2009, bringing the country into recession. This decline may be attributed to the global financial crisis and Greece’s failure to address the fiscal problems. Unemployment rose to 9.5% in 2009 from 7.7% of the previous year. On the other hand, inflation went down by nearly 3 percentage points. Price levels show an uptrend since 2003, almost reaching the EU average in 2009. With Greece taking a step towards comprehensive structural reforms to address its current debt crisis and restore competitiveness, the Organisation for Economic
Show More

Related Documents: Greece - Debt Crisis Essay

The Greece Debt Crisis

Greece Debt Crisis Greece started spiraling out of control financially in late 2009, which leaves them where the Europeans are today, debt. Greece government (Parliamentary Republic) relies on borrowed money to balance their books and begins to really get out of hand when credit rating agencies downgraded Greek government to “junk” pushing the cost of borrowing so high that the country effectively overdraft cancelled over night. The general information on Greece would be that the government…

Words 913 - Pages 4

Essay about Accountability, Representation and Control

Control Abstract This paper is concerned with the concepts of accountability; representation and control explain the euro debt crisis in detail. The author takes a deeper journey into the meaning of occurs of Euro sovereign debt crisis by use of definition of ARC to in-depth explain this issue. We propose further examination of the ARC relating to the Euro sovereign debt crisis in order to propose a prosperous and harmonious of Euro zone. Table of Content Abstract 1 1. Introduction 4 2. Summary…

Words 3665 - Pages 15

European Debt Crisis Essay

Our story begins two years later, when Greece becomes accepted as the 12th member of the eurozone countries. In the recent past, a number of EU members, including Greece, Ireland, Portugal, Spain and Belgium, shook the global financial markets with their sovereign debt crisis. In this paper, we will primarily focus on financial crisis in Greece, discussing the current situation and exploring the root…

Words 2345 - Pages 10

Business Economics Report Submit Onli Essay

5 References 6 HOW THE GLOBAL DEBT CRISIS COULD AFECT YOU Reasons for selecting the article The reasons for choosing the article are that firstly, it stated that aggregates for economic consequences, GDP, recession and unemployment have greatly affected Singapore economy. The article also focused on the nation behaviour of the declining economy for US and Greece due to finance crisis which in turn affect other nations, in this case, Singapore. In fact…

Words 1247 - Pages 5

Essay about ARC model in euro crisis

& control in Euro Crisis Introduction Compared with the worldwide financial crisis happened since 2008, the European sovereign debt crisis has been the most serious problem for the ECM. This crisis, also called “the Euro Crisis”, has been regarded as the most serious financial crisis at least since 1930s. This crisis began with the Greek fiscal crisis in the autumn of 2009, and then it evolved into the “PIIGS Crisis”—five main European…

Words 2991 - Pages 12

Economic Crisis Essay

* Introduction Economic crisis in Greece affected to all EU countries. In this argument paper, I will define the economic crisis. Then, I will present a brief background about economic crisis in Greece. After that, I will give the two sides of this argument about whether European Union and Greece win or lose in this crisis. Finally, my opinion. * What’s economic crisis Economic crisis is the sudden disruption occurs to the economic balance in a country or several countries. It calls in particular…

Words 622 - Pages 3

Financial Crises Essay

examined will be the Dot-Com Bubble, the Great Recession in the United States and the Greek Crisis. A detailed analysis will be given of each crisis including a comparison of the different events. The first crisis to be examined will be the Dot-Com crisis. This crisis occurred from 1997 to 2000, with the effects of its aftermath being felt until 20021. The country that it affected was just the United States. This crisis was caused by the bubble growth of Dot-Com companies. Dot-Com companies were businesses…

Words 1430 - Pages 6

Essay on Argentina Crisis Related to Greece's Case

BANKING PAPER REQUIEREMENTS My paper will discusses about the link between both crisis in Greece and Argentina, what we have learnt since this crisis and what are the common mistakes committed by both. Economic environment “Eleven years after the financial crisis of 2001, which led to the largest default in history (75 billion Euros), Argentina has reimbursed, the August 3, the last holders of securities issued during the freezing of assets, called "corralito" ("small enclosure")…

Words 2678 - Pages 11

Analysis of European Financial Crisis Essay

Abstract The global financial crisis that began in 2007 continues to evolve and spread, it affects every country in the world. A dangerous economic instability has settled in Europe that threatens to melt down the single currency. The purpose of this research is to identify what is the future if the current crisis continues and if the Euro disappears. After examining the current situation of the crisis and its effects on each country, many questions can be asked and assumptions can be made on…

Words 6578 - Pages 27

Essay on Case study 2 Goldman Sachs

agreed on a strategy to bail out Greece, a country that had joined that European Monetary Union (EMU) in 1981. Greece had finally adopted the Euro currency in 2001. Greece went into unrecoverable debt by overspending income on social programs and other projects to benefit Greece, thus not allowing them to pay off loans, or borrow money to do so. In 2001, Greece wanted to join the EMU but faced certain obstacles concerning their current debt. Greece required a 60% debt-to-GDP ratio for admission to The…

Words 686 - Pages 3