The Greek financial crisis is currently occupying a large proportion of our everyday news, this essay will examine the nature of the ‘crisis’, what is at stake for the actors involved, and why the financial calamity is significant to the study of international relations.
Greece’s extreme debt problem can be linked to the global financial crisis (GFC) that has tormented the world from late-2007 (Murse, 2011) . The statistics tell all that needs to be told; in 2009 Greece had a budget deficit of about 12.9% of GDP, while their overall debt was an incredible 113.4% of GDP (Applebaum, 2010). The reason Greece was hit so hard by the GFC can be put down to an unusually old fashioned legal system, a difficult, sometimes laughable bureaucracy and a closed economy which doesn’t easily facilitate foreign investment (Applebaum, 2010).
While all this seems bleak, it only gets worse. Greece is a member of the European Union, and shares the same currency (Euro) with 22 other countries (Rosenberg, 2011), who sit in a range of financial positions. The euro is being weighed down by countries collectively known as the ‘PIGS’, Portugal, Ireland/Italy, Greece and Spain (Applebaum, 2010), with Greece sitting in what is, arguably, the worst position.
As a result of having a regionalist form, a number of actors are now involved in the Greek predicament. For these actors, which contains the International Monetary Fund and all the euro-countries, a lot is at stake including the financial reputation of the euro and Greece’s credit rating (which is already the lowest of all the euro zone) (CNN, 2010). The below average credit rating means there is a higher chance of default on loans to Greece, and in turn countries are less likely to loan money to aid re...
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Sovereign lending, throughout history, has been marked by occurrences of partial default and repudiation by governments of all kind; from medieval princes to dictators to democratic regimes. In the 1970s lending to lesser-developed countries led to the rescheduling and partial defaults in the 1980s. Even the sustainability of the debt of nations such as Belgium, Canada, Italy and even the United States is not free from suspect.
The credit crisis is referred to as economic downturn by credit squeeze, provision of doubtful debt and bankruptcies among others. (IMF, 1998) Credit crisis is known as a credit crunch, it is an extension of recession. According to the Ocaya (2012), Credit crisis is a sudden shortage of loan and tightened the requirement of economy and society needs of getting loan from financial institutions. In such situation, lender started keeps the cash and stop lending money because they are worry about a large of debtor bankrupt and mortgage defaults. Lender had adjusted the interest rate of borrowing to unaffordable rate. Credit crisis decrease the total demand and fall in supply, therefore, it constrains the growth of the economy. The credit crisis is begun in the early 2006 when several events relating the financial system went wrong in the United States of America. The factors leads to credit crises are complex with varying weight.
As Babe Ruth, a famous baseball player once said, “It is hard to beat a person who never gives up.” When facing a challenge that requires an immense amount of perseverance or let alone, any obstacle in life, the person that sticks to it eventually comes out with an answer or solution. With morale very close to this, the Greeks were determined to outwork the Nazis in World War II in order to reclaim their country. Modern Greek authors such as Ileana Karafilly and other anonymous poets like those translated by Wislawa Szymbroska portray characters in their works that exemplify the concept of having the drive to pursue what you want by hard work and a strong willed attitude of putting personal needs ahead of others. Being trapped in Greece’s Nazi invaded society that was stuck in an “every-man for them self” perspective, no one could trust one another. Once the people realized that they would have to fight for what they wanted, the citizens and characters were able to achieve anything they set their minds to as long as they were willing to work for it. This fight to regain their home country began on April 6, 1941 when Germany invaded Greece and the conflict began. With the country no longer in control of Greeks, but rather in foreign control, pandemonium spread within the country(Livanos 15-16). While Nazis were in control people lived in resistance, wanting to fight the Nazis in order to regain their freedom(Livanos 1-3). Finally on October of 1944 Greece was liberated, however with Greece left in bad shape, its economy failed and has remained weak still to this present day (Shiller 15-18).
After world war II, Germany got help with its debt from its former enemies. Who helped Germany then? Greece” (Associated Press). Germany was given support because it is one of the powerhouses in Germany economically, but Greece’s debt is not being forgiven because Greece is a tiny country that not many think about. It seems that the European Union gives more power to the bigger, more well-known,
All but four countries in the world has external debt (“Country Comparison: Debt External”). Having a debt is almost as common as having a mortgage. Since its establishment, The United States has always been in debt (“Historical Debt Outstanding – Annual”). The US national debt has had five sharp increases previously in its history. The reasons include civil car and the two World W...
He also adds that the prospects of future gender or racial integration are low. He describes the top Greek houses as the ones who had produced the wealthiest and most influential alumni, and by his words, they are also the most homogeneous groups. Most of their members answer to the same characteristics – they are white, attractive, Christian, heterosexual girls and boys who come from middle- to upper-class families. Also, those boys and girls all behave in specific manners, traditional for their respective genders. Members of the so-called 'second-tier' Greek organizations are not as wealthy or influential as the Greeks from the 'first-tier' Greek organizations and they are also more heterogeneous in terms of ethnicity and behavior ( according
"Europe must prevent Greece from becoming an out-and-out catastrophe and make sure that the same fiscal 'remedy' is not applied to other weak economies" -- Franziska Brantner.
Kofas, Jon (May 31, 1985). Intervention and Underdevelopment: Greece During the Cold War. Pennsylvania State University Press. p. 40. ISBN 978-0-271-02647-3.
Historically, financial crises have been followed by a wave of governments defaulting on their debt obligations. The global economic history has experienced sovereign debt crisis such as in Latin America during the 80s, in Russia at the end of the 90s and in Argentina in the beginning of the 00s. The European debt crisis is the most significant of its kind that the economic world was seen started from 2010. Financial crises tend to lead to, or exacerbate, sharp economic downturns, low government revenues, widening government deficits, and high levels of debt, pushing many governments into default. Greece is currently facing such a sovereign debt crisis and Europe’s most indebted country despite its surplus in the early 2000s. Greece accumulated high levels of debt during the decade before the crisis, when the capital markets were highly liquid. As the crisis has unfolded, and capital markets have become more illiquid, Greece may no longer be able to roll over its maturing debt obligations. Investment by both the private and the public sectors has ground to a halt. Public sector debt has increased substantially as the state had to rely on official assistance to payroll expenses, fiscal deficit and fund social payments.
The Greek economy has seen a large collapse following the recent worldwide recession. The European Union has expressed concerns for the impact that Greece’s economic collapse will negatively affect other member nations. Greece and the European Union are working to reduce the Greek deficit and to contain the economic crisis to Greece.
Greece." Journal Of Critical Studies In Business & Society 3.1 (2012): 12-39. Business Source Complete. Web. 4 Apr. 2014.
Eurozone crisis has had huge impacts not only on the economy of the UE but also on the other countries who have economic and financial relations with the members of the union. The reason why we have decided to examine the Eurozone crisis in detail is to have a better understanding of the mechanisms behind this extremely important and complex problem and also to make accurate inferences about the solution alternatives. In our pape...
The article titled “You Are What You Owe,” centers around the recent gridlock in Washington over the debt ceiling (Mallaby, 2011). The article explores what would have happened had the United States government not come to an agreement on the American debt ceiling. The article also relates the United States crisis to previous counties that have faced this crisis in the past (Mallaby, 2011). The article reports on the finance and economic conditions in 2011 in the United States during the debt crisis (Mallaby, 2011). The article also discusses the American credit and bond strength and government’s securities, as well as the United States federal debt (Mallaby, 2011). The Gross Domestic Product or GDP, for different countries is also discussed in this recent article (Mallaby, 2011). The United States foreign economic relationships are also explored in the article titled, “Yo...
The Greek crisis is a result of an accumulation of dire policy mistakes. It all began when the previous Greek governments decided not to reveal their debts and deficits in order to fulfill the necessary requirements for the membership of the Eurozone. Furthermore, the government consisted of mass tax evasion as well as corruption. In 2009, the newly elected Greek government decided to expose the real debt and deficits’ figures, which brought much speculative waves regarding the economy. At the moment (since 2010) a number of organizations and countries are providing the Greek state with assistance in regards to alleviating their government debt. International organizations, such as the International Monetary Fund and the European Governing body, the European Union, are undergoing a set of policies designed to assist Greece in its debt crisis. One of the main supporters of the Greek economy is German...
Some of the major questions that are addressed in International Political Economy (IPE) are questions surrounding the debt crisis. Many people want to know how it happened, what made the crisis worse than it originally was, the factors that contributed to worsening it and the plans implemented to improve the situation. To answer this, the role played by Least Developed Countries (LDC) and Developed Countries (DC’s) needs to be evaluated.