Financial Crisis in Greece

Topics: European Union, Euro, Greece Pages: 2 (859 words) Published: November 19, 2011

Cuyco, Alvin Jason C.

Enter the economy of euro zone member, Greece. Once considered as a financially stable country, Greece is now on the edge of having a financial default. With a debt total amounting to an estimated $420 billion, experts say that this debt would have been bigger that the country’s economy itself and this debt is predicted to increase as time goes by because Greece spends 12% more than it gets revenues. So what’s exactly went wrong with Greece and how did they get themselves in deep trouble? One main cause for this is the country going on an uncontrolled spending binge which relies on debt to be sustained. One prestigious project they paid for over its budget limit is the 2004 Athens Olympics. Add that up to the failure of implementing consistent economic reforms and lending with despicable returns eventually led Greece vulnerable to a debt crisis. In result of this, Fitch ratings agency cuts Greece’s credit rating from an A- to a BBB+, first time in 10 years that the country has seen its ratings below an A grade. This will prove to be a big blow to the country as it now pushes up the cost of borrowing money. It will also be viewed by their foreign investors as a financial void as they would be given lower interest payments for their investments. To try and cope up with this downfall, the government stated its plans on making some harsh cuts on their budget. As this debt crisis develops, thousands of Greek workers went on a strike to protest these austerity measures Greece is willing to go for them to avoid a default, closing schools, government offices and airports. After weeks of negotiation with the euro zone, Greece accepted a bailout package worth $146 billion over three years to rescue the country’s economy. This also entitles a tighter austerity bill which cuts benefits, restricting widespread retiring early and raising women’s retirement age to 60 matching the men at 65. This enraged...
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