Greece is making some major headlines these days, and not for good reasons. It seems that Greece is in a major financial crisis that is taking all of Europe by storm, and the Greek government is scrambling to dig itself out of this devastating hole. Many people wonder how Greece got to this point, as well as what is being done to solve the problem. So, what’s really happening in Greece? Read on for the details:
Greece’s national debt. Apparently, Greece’s debt is bigger than its economy; Greece reportedly spends nearly fourteen percent more than what it takes in. The total amount of debt is around 300 billion Euros (or about 415 billion US Dollars). Greece’s public debt rate is one of the highest in the entire world.
How did this happen? Greece’s financial crisis was brought on by a number of contributing factors. The most obvious reason is mismanagement of the economy: years of overspending, cheap lending, and a lack of appropriate financial reform when it was needed the most. On top of that, Greek government made matters much worse by continuously and purposefully misreporting the country’s economic statistics in order to meet the guidelines of the monetary union. This enabled them to continue overspending and digging themselves deeper into the hole, while hiding their growing deficit from the EU overseers. When Greece was finally exposed for these unethical practices and its economic status was revealed, the country was given the lowest credit rating in all of the eurozone. Foreign investors began steering clear of dealings with Greece, leaving the struggling country in an even tougher spot to pay back its debt.
How does this affect the rest of Europe? It goes without saying that the Euro’s reputation for stability is suffering a great deal. Additionally, many European leaders are worried that Greece’s financial woes will send out a negative message to European countries that are already on the lower end of the economy – namely Portugal and the Republic of Ireland.
What is Greece doing to counter its crisis? For starters, the Greek government has cut down on its spending in a major way – slashing funding for a number of popular programs – and there are further plans to cut the spending deficit by 10 billion Euros. Greece has also hiked up taxes on alcohol, tobacco, and fuel, raised the retirement age by two years, and implemented some tough new tax evasion laws.
Of course, the people of Greece are unhappy over their country’s financial crisis. To make matters worse, they are up in arms over the measures the Greek government is taking to solve this dilemma. How will Greece fare when it’s all over? Only time will tell.
About the Author: Kelly Meinke is a business consultant who enjoys keeping up with government and finance news. Her primary goals are to help small businesses find affordable VOIP services and other tools they can use to keep their overhead costs down.