Essay on The Debt Crisis Of Greece

1241 Words Jul 13th, 2015 5 Pages
The Debt Crisis in Greece

Greece’s economy has undergone a severe recession since the debt crisis began in 2010, with the economy over a quarter smaller now than it was then. Two international bailout programs in 2010 and 2012 have provided a total of around £171 billion in financial aid to Greece. Attached to these loans have been stringent conditions designed to reduce the budget deficit and improve economic competitiveness. (Harari)

Greece is becoming the first country to crash out of the euro, and represents just 2% of the Eurozone. Its economy is worth about $200 billion, making it slightly bigger than Alabama, but smaller than Oregon, respectively in comparison. (CNN)

Most of Greece’s debt is now held by other governments and international institutions that are strong enough to cope with a default. Some U.S. hedge funds are invested in Greek banks, and have already taken hefty losses. However, most global banks have relatively little at stake in Greece’s financial system. (CNN)

Much of Greece’s government debt is owed to banks outside of Greece, with the largest amounts in France and Germany. So if Greece stopped paying, the French and German banks would suffer a substantial loss. (Kashyap)

There are three important things that happened in Greece. First, Greece made further substantial progress on closing its deficits. By late 2014, Greece was finally spending less than it was collecting, although the interest payments on debt…

Related Documents