Enter the economy of euro zone member, Greece. Once considered as a financially stable country, Greece is now on the edge of having a financial default. With a debt total amounting to an estimated $420 billion, experts say that this debt would have been bigger that the country’s economy itself and this debt is predicted to increase as time goes by because Greece spends 12% more than it gets revenues. So what’s exactly went wrong with Greece and how did they get themselves in deep trouble? One main cause for this is the country going on an uncontrolled spending binge which relies on debt to be sustained. One prestigious project they paid for over its budget limit is the 2004 Athens Olympics. Add that up to the failure of implementing
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One of the reasons why the rest of the Europe is trying their best to save Greece from this deep hole is because if ever Greece defaults for their debts, financial markets will view this as a negative thing against the high reputation of the euro, it could lead to a significant fall against other key currencies. It can also ignite a break-up of the European Union, since Greece went down in the very own eyes of the union, other participant countries would think that it can also happen to them and the union isn’t serving its purpose, and thus it will be better for them to just split from it.
Just three months after getting a bailout loan, the European Commission stated that Greece has met conditions that were set to receive the new 9 billion euro part from the bailout. Another series of tranches happened to help Greece, but it didn’t stop the S&P from downgrading the country’s credit rating to CCC, the lowest credit rating in the world and just four steps away from default. Another tight austerity measure was proposed and as expected, the people didn’t like it as they again protested against this launched another array of strikes. Recent news reports that Greece is looking forward to an another bailout package to help Greece roll over about 4 billion euros of bills plus about 3 billion euros of couple payments in this month.
Whatever happens to this debt crisis of Greece, I hope this would serve as an example to other