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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... PM ET). The Future Is Greek Retrieved 28/02/2012, 2012, from http://www.slate.com/articles/news_and_politics/foreigners/2010/02/the_future_is_greek.html
Charlemange. (2012). Too long an illness Retrieved 28/02/2012, from http://www.economist.com/node/21548259
CNN. (2010). Q&A: Greece's financial crisis explained, from http://edition.cnn.com/2010/BUSINESS/02/10/greek.debt.qanda/index.html
Donadio, R. (2012). The Failing State of Greece Retrieved 28/02/2012, from http://www.nytimes.com/2012/02/26/sunday-review/the-failing-state-of-greece.html?pagewanted=1&_r=2&sq=greece&st=cse&scp=2
Murse, T. (2011). When Did the Great Recession End? Retrieved 28/02/2012, from http://usgovinfo.about.com/od/moneymatters/a/When-Did-The-Great-Recession-End.htm
Rosenberg, M. (2011). Euro Countries, 28/02/2012, from http://geography.about.com/od/lists/a/euro.htm
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