Was the fiscal crisis unequivocally Greece's fault?
Was the fiscal crisis unequivocally Greece's fault?
To blame the whole eurozone fiscal crisis on the Greek economy would be a mistake, nonetheless it had a major role in the magnitude of the situation by emphasizing the weight and importance of this crisis. The understatement of the gravity of their public debt came up when the global financial crisis started in 2008, at that point the greek economy started to crash having a snow ball effect on the rest of the zone. The weight of Greece on the EU affected all the other members adding additional troubles to countries which already had an impacted economy. To understand the role of Greece in the crisis one should start by analyzing the general condition of their economy and how it could affect the rest of the zone.
When Greece decided to join the eurozone, the current prime minister Simitis tightened the tax authority and was able to rebalance the countries' GDP from a deficit to a surplus stabilizing the growth for the rest of the decade. Even with an important public debt, in 2001 Greece joined the eurozone, and in 2008 their public deficit reached 15.5% of GDP. Event at that time their economy wasn't structured enough to accept the euro, and this raises the question of the other Euro-nations' fault for accepting Greece in the zone. Furthermore shortly after the adoption of the euro currency, tax evasion grew again and the public spending budget (such as employee compensation, pensions..) became unsustainable. Their economy structure was also a reason for their lack on international investments, in addition the businesses climate didn't give the opportunity for small business to grow easily. Labor costs increased, exports decreased, and the greek economy was mainly supported by services and the financial sector. Other problems including the overstatement of the greek exchange rate and data falsification added to vulnerability of the greek government. Hence, when the global fiscal crisis hit Europe and
To blame the whole eurozone fiscal crisis on the Greek economy would be a mistake, nonetheless it had a major role in the magnitude of the situation by emphasizing the weight and importance of this crisis. The understatement of the gravity of their public debt came up when the global financial crisis started in 2008, at that point the greek economy started to crash having a snow ball effect on the rest of the zone. The weight of Greece on the EU affected all the other members adding additional troubles to countries which already had an impacted economy. To understand the role of Greece in the crisis one should start by analyzing the general condition of their economy and how it could affect the rest of the zone.
When Greece decided to join the eurozone, the current prime minister Simitis tightened the tax authority and was able to rebalance the countries' GDP from a deficit to a surplus stabilizing the growth for the rest of the decade. Even with an important public debt, in 2001 Greece joined the eurozone, and in 2008 their public deficit reached 15.5% of GDP. Event at that time their economy wasn't structured enough to accept the euro, and this raises the question of the other Euro-nations' fault for accepting Greece in the zone. Furthermore shortly after the adoption of the euro currency, tax evasion grew again and the public spending budget (such as employee compensation, pensions..) became unsustainable. Their economy structure was also a reason for their lack on international investments, in addition the businesses climate didn't give the opportunity for small business to grow easily. Labor costs increased, exports decreased, and the greek economy was mainly supported by services and the financial sector. Other problems including the overstatement of the greek exchange rate and data falsification added to vulnerability of the greek government. Hence, when the global fiscal crisis hit Europe and