Greek Debt Crisis Research Paper

The debt crisis in Greece officially started in 2010; however, it can be argued that this was going to happen two years earlier. When Wall Street imploded because of the recession in the United States, Greece became the center focus of the debt crisis in Europe. To make matters worse, Greece announced one year later that they had a bigger deficit then they had originally thought. This event led to many questions asked on how Greece handles their money. To understand the crisis in Greece, it is essential to return to the year 2001 when the euro was introduced as a common currency in Europe. The Euro effectively increased trade; however labor costs increased therefore making Greek exports less competitive. This resulted in a significant increase in Greece’s trade deficit as Greece was consuming more than it produced. This is where …show more content…
While this money and time has healed the wounds of Greece’s economy, the problems have not gone away and probably never will. Despite implementing measures of austerity, the economy has shrunk by a quarter in the last five years and the unemployment rate is 25 percent and rising. Most of the bailout money has been allocated to pay off Greece’s international loans, therefore never actually being injected into the local economy (“Greece’s Debt Crisis Explained.”). Amid other issues was the concern that Greece’s financial problems would spread not only to other European nations but also across the world. A loan default by Greece might have produced a global financial shock. However, this opinion is not shared by everyone and there are people who believe that Europe’s safeguards are enough to prevent the financial damage from spreading. Greece’s possible exit from the European Union might benefit both Greece and its