The Eurozone: The Greek Debt Crisis

When something so dramatic as a crisis happens, it is a common practice to look for a party to blame. With the implosion of Greek economy and the start of the European sovereign debt crisis in 2009, people looked for a place to point accusations. The question of whose fault exactly was the Greek debt crisis is a complicated matter, one that brings to light the problematic power dynamics employed in the eurozone. From 2009 until now the crisis has evolved, exacerbated by the capitalistic control systems of Europe’s financial titans. A large portion of Greece’s problem can be attributed to these limiting and oppressive undercurrents. The eurozone’s dominating tactics have caused major troubles for the Greece and its citizens. Up until the …show more content…
In the twenty days following the start of the crisis, extreme amounts of Greek sovereign bonds were returned (de Haan and Mink 102). Interest rates on long-term government debt soared, peaking at 42% in 2012 (Dellas and Tevlas 492). Greece was shut out of financial markets, even as they veered towards bankruptcy, and were disallowed from borrowing any money until the EU met to discuss the matter (Alderman et al). The topic of bailouts for Greece was greatly debated between the EU, the most notably opposed country being Germany. By March of 2010, a compromise was agreed upon that called for bilateral loans from the other countries in the EU as well as loans from the International Monetary Fund (IMF) at a reduced rate (Arghyrou and Tsoukalas 174). These two financial players, the EU and the IMF, paired with the European Central Bank (ECB) form a group called the troika. The troika planned to issue two bailouts for Greece, together totalling upwards of €240 billion. These loans, combined with their already outstanding balance, brought Greek debt up to €320 billion (Alderman et al). By 2012, in relation to their GDP Greece had accumulated a debt of 177% (Major …show more content…
Austerities are enforced to attempt a reduction of government expenditure and to help shrink the budget deficit. In order to receive financial assistance, the EU demanded that Greece agree to the employment of these austerity measures, as well as a reformation of government finances (Major 432). The austerity measures were extremely unforgiving, but believed vital for rebooting Greece’s economy as a more streamlined version of itself. The hope was that with this newer, sleeker economic model would kick-start the economy’s healing process and make it easier for Greece to repay its EU creditors. Greek government had to make deep budget cuts, increase taxes, raise the retirement age, slash pensions, expand property taxes, and make a variety of other harsh reductions. Grecians were less than happy about the austerities and responded with protests, strikes, and even riots (Alderman et al). These measures act as another method of control over Greek government, this one supplied by the