During last few days ,or months now, the Greek crisis – has made headlines around the world. Sometimes I wonder who caused this Economic Crisis. Teachers never stopped going to school, Police did there job, Army was at work, Fireman, office workers, laborers they all did there jobs. So if none of them was responsible, the question is who was. The Banks? The Government ? Or the People with virtual jobs ?
This article tries to answer some of above stated questions and explain in simple terms how Greece found itself in this mess.
Greece has been going through a financial meltdown for years. And since the country is a part of the eurozone, what happens in Greece doesn’t stay in Greece.
What does “Eurozone” means?
Throughout history, European countries were always at war with each other. After the Second World War, Europe was in ruins, its economy in shambles, and its political authority in the world diminished.
European countries realized that to survive in the post-War world with stability and relevance they could not afford more wars. For this, they had to find a way to come together and resolve differences. This led to the formation of the European Union (EU).
To make business easier, a common currency was introduced – the Euro. Countries which adopted the Euro formed the Eurozone; these countries abandoned their former currencies and allowed the newly formed European Central Bank (ECB) to make economic policies.
The eurozoneis a monetary union of 19 of the 28 European Union (EU) member states which have adopted the euro (€) as their common currency. The other nine members of the European Union continue to use their own national currencies.
The eurozone consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland,Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain.
What is the main cause of crisis?
In 2001, Greece was given a chance to join the eurozone, and enjoy similar legitimacy in global markets as countries like Germany.To prove that Greece could handle sitting at the EU table, the country had to show that its budget was in check. It wasn’t. But Greece pretended that it was by doing things like moving certain expenses off the books. Once it got the OK to join the eurozone, the country started partying like it was at a big, fat, Greek wedding. Public sector wages rose to way more than a private-sector paycheck. Pension spending was way up, and it didn’t help that the retirement age was 58. Or that tax evasion was the norm. Then the global financial crisis hit, and soon everyone woke up to a Greek tragedy.
Greece eventually realized it was hundreds of billions of dollars in debt. It was forced to ask its European parents for help. The so-called “troika” of international creditors -- the IMF(International Monetory fund), ECB(European Central Bank), and euro member countries -- stepped in with a series of bailouts. In exchange, the troika said Greece better shape up. That meant austerity measures like public sector layoffs, pension cuts, and tax hikes.
What is the condition now?
Living standards are way down, and more than a quarter of the country is unemployed. A political party called Syriza that pledged to change all this mess was elected to power on promises to undo austerity. For months, the new government and its creditors fought over the terms of yet another bailout plan. In the meantime, Greece became the first eurozone country to go into default.Greece and its international parents finally agreed on the terms for a third bailout plan. But it’s unclear if Greece’s anti-austerity lawmakers are going to go along with the plan. They're deciding whether hold a snap election to kick the current prime minister out of power.
What if Greece goes bankrupt?
If this continues, Greece could default (meaning, be declared bankrupt). Normally, a small country like Greece defaulting wouldn’t cause international concern. But because of the Eurozone, if Greece defaults, Spain or Ireland could be next. Then Italy, then Portugal, France and then Germany – and with that the entire world will be dragged into the major economic crisis. This could lead to civil unrest; political instability and possibly warfare.
In the next few days Greece will be at the center of the universe; the international spotlight will be focused on the Greek people.The future of Europe – and the world – hangs delicately in balance.
This article tries to answer some of above stated questions and explain in simple terms how Greece found itself in this mess.
Greece has been going through a financial meltdown for years. And since the country is a part of the eurozone, what happens in Greece doesn’t stay in Greece.
What does “Eurozone” means?
Throughout history, European countries were always at war with each other. After the Second World War, Europe was in ruins, its economy in shambles, and its political authority in the world diminished.
European countries realized that to survive in the post-War world with stability and relevance they could not afford more wars. For this, they had to find a way to come together and resolve differences. This led to the formation of the European Union (EU).
To make business easier, a common currency was introduced – the Euro. Countries which adopted the Euro formed the Eurozone; these countries abandoned their former currencies and allowed the newly formed European Central Bank (ECB) to make economic policies.
The eurozoneis a monetary union of 19 of the 28 European Union (EU) member states which have adopted the euro (€) as their common currency. The other nine members of the European Union continue to use their own national currencies.
The eurozone consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland,Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain.
What is the main cause of crisis?
In 2001, Greece was given a chance to join the eurozone, and enjoy similar legitimacy in global markets as countries like Germany.To prove that Greece could handle sitting at the EU table, the country had to show that its budget was in check. It wasn’t. But Greece pretended that it was by doing things like moving certain expenses off the books. Once it got the OK to join the eurozone, the country started partying like it was at a big, fat, Greek wedding. Public sector wages rose to way more than a private-sector paycheck. Pension spending was way up, and it didn’t help that the retirement age was 58. Or that tax evasion was the norm. Then the global financial crisis hit, and soon everyone woke up to a Greek tragedy.
Greece eventually realized it was hundreds of billions of dollars in debt. It was forced to ask its European parents for help. The so-called “troika” of international creditors -- the IMF(International Monetory fund), ECB(European Central Bank), and euro member countries -- stepped in with a series of bailouts. In exchange, the troika said Greece better shape up. That meant austerity measures like public sector layoffs, pension cuts, and tax hikes.
What is the condition now?
Living standards are way down, and more than a quarter of the country is unemployed. A political party called Syriza that pledged to change all this mess was elected to power on promises to undo austerity. For months, the new government and its creditors fought over the terms of yet another bailout plan. In the meantime, Greece became the first eurozone country to go into default.Greece and its international parents finally agreed on the terms for a third bailout plan. But it’s unclear if Greece’s anti-austerity lawmakers are going to go along with the plan. They're deciding whether hold a snap election to kick the current prime minister out of power.
What if Greece goes bankrupt?
If this continues, Greece could default (meaning, be declared bankrupt). Normally, a small country like Greece defaulting wouldn’t cause international concern. But because of the Eurozone, if Greece defaults, Spain or Ireland could be next. Then Italy, then Portugal, France and then Germany – and with that the entire world will be dragged into the major economic crisis. This could lead to civil unrest; political instability and possibly warfare.
In the next few days Greece will be at the center of the universe; the international spotlight will be focused on the Greek people.The future of Europe – and the world – hangs delicately in balance.
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