Greece Economic Crises



Executive Summary3

Background4

Issues Related to the Greek Economic Crisis5

Economic Growth6

Government Deficit6

Level of the Government Debt6

Devaluation of the Currency7

Analysis7

Situation with Germany7

Effects on Other Economies8

Exit from the Euro zone8

Possibilities for Greece9

Overall Impact on Europe9

Predictions10

Situations for Greece10

Another Possible Scenario11

Effects of Different Currency11

Exemption of Greece from Euro Zone12

Conclusion12

Executive Summary

The economic crisis of Greece has been one of the biggest crises that have faced Europe for a very long period of time. The basis of the crisis had been some of the structural weaknesses of the Greek administration as well as their excessive government debt. The increased government expenditure and the way economic recession has struck Europe can be best understood by looking at the Greek crisis. The crisis had really put a question mark on the way European Union has been operating as well as the concept of single currency in the jeopardy. It is yet to be seen that whether Greece would be the part of the European Union in coming time or whether it would revive its old currency. Either way, things are not looking good as at one hand, the public is not really adoptive to excessive taxation, on the other hand they also want to be attached with the Euro Zone but at the moment both these objectives are hard to achieve.

Greece Economic Crises

Background

If one looks at the some of the largest debt crisis, it can be seen that Greek economic crisis is one of the largest debt related crisis that has struck the economy. The crisis was the aftermath of the global economic recession, and as per October 2008, the crisis has stemmed further and now it is pretty much the part of the lingering economic crisis that are prevailing in Europe. There are many weaknesses that have contributed towards the crisis, and some of the structural weaknesses of Greek government are the prime reasons for this crisis. At the same time, the debts to GDP ratio on the public accounts are some of the other reasons for this crisis. As far as the background of the crisis are concerned, they culminated due to the fact that there were fears of sovereign debt crisis that contributed towards the economic crisis as well as the lingering doubt of the investors that were too afraid at that point of time as far as the Greek's ability to meet their financial obligations.

The reports of increased government expenditure also contributed towards the economic crisis. The level of confidence that investors had on the government took a beating due to the excessive debt and this resulted in the increase of the interest yields on the bond. The cost of the risk insurance were also needed to be taken into the account and when one compares it to other countries, it is pretty much evident that Greece was the country that was being struck the hardest by the lingering economic crisis. The costs of the risk insurance also increased in Greece. Even though this is something that as pretty much common in ...