Greece’s Economic Turmoil and the Global Economy The financial headlines of 2012 were prevalent with the tribulations of the Greek economy. Its problems, in the eyes of many of the other nations of the euro zone, were not only negatively impacting the prosperity of the Greeks, but also the viability of the European Union. The country as a whole requires a major restructuring. Not only are drastic changes needed in financial and economic policies, but the Greeks need to understand their attitude of government entitlements cannot be sustained. The mismanagement of the Greek economy is also evident in its place in the global market community. It has not found the path that a county needs to follow to become an active member of the vibrant,
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As Athens was spiraling into turmoil, in November 2011, George Papandreou decided to step down and Lucas Papademos was named Prime Minister. He quickly assembled a temporary government of national unity and pledged to approve the harsh terms of the second European aid package of $150 billion. As a result of the economic crisis, the credit rating agency, Standard & Poor’s (S&P) eventually downgraded Greece’s long-term sovereign debt rating from BBB+ to BB+ and eventually bottomed out at SD, selective default ("Re Ratings On Greece”). Greece’s debt had ballooned to 113 percent of GDP in 2009 and just kept growing, 130 in 2010, 148 in 2011 and is over 170 for 2012. By comparing what Greece owes to what it produces, the debt-to-GDP ratio indicate the country’s ability to pay pack its debt. It goes without saying that the higher the debt-to-GDP ratio, the less likely the country will payback its debt and the higher its risk of default. This was a growing concern in Greece during their financial crisis (“Greece Government”).
The financial crisis has emphasized the limitation of the euro membership for Greece, as well as Spain, Italy and Portugal. These countries are unable to devalue their currencies to salvage competitiveness and are forced by the European Union (EU) to control spending. In a time when their economies need an increase in consumer spending they are facing austerity measures. Since Greece is a member of the European Monetary Union (EMU), the