Greek Debt Crisis

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Greece has been experiencing lingering financial discord as its debt has risen and its economy has contracted over the last three years. As a result, the challenges caused by this global crisis are crippling for its population and economic base. As a result, Greece's economic crisis has impacted industries, with small business owners such as shopkeepers and restaurant owners bearing the brunt of the brunt. The debt crisis in Greece has spilled over into Eurozone countries such as Germany and Italy, as well as other European Union nations and former members such as Denmark and the United Kingdom. Apart from its effect on European Union countries, the crisis had far-reaching effects to other countries outside of the European Union such as Turkey as Syrian refugees came north through the Greek borders in attempts to escape the influence of ISIS in the middle east. How did this crisis arise? This discussion attempts to analyze the causes the Greek crisis, the effects of the crisis on other countries in the European Union and outside the Union, the various bailouts, and the results of a spike in the number of war refugees on poverty in the EU. From the failure of different bailouts, I say that the Greece economy should be allowed to collapse to enable a new start for the Greeks.

The issue of the Greek crisis was first introduced to me by my calculus high school teacher. The teacher was discussing the financial implications of the Greece debt and the massive bailouts that Greece had received. Following the global financial collapse of 2008, Greece was thrown into economic turmoil due to its large debt load. As other European nations were recovering, the economy in Greece did not recover. Lenders stopped giving Greece loans which forced the European Union and the IMF to intervene and give Greece loans that were termed as bailouts. Essentially, the two organizations placed the Greek economy on life support with no clear path to recovery. Encountering the same issue and understanding that after three years the crisis has not been resolved, presented the enormity of the situation. To me, coming across the situation again after three years is like seeing an old schoolmate, who was just an acquittance, with their lives in shambles. The situation in Greece is worsening as the debt keep on aggravating, and the people have become more impoverished. If the situation is still ongoing, it is as if the issue was swept under the rug by the EU as companies and countries pulled out and washed their hands rather than pulling together to solve the problem at hand. The Greece situation begs the question, is it not important to solve problems before they grow to get out of control eventually? Although different countries have their economic problems, is it not the ripe time for various countries to zero in on the economic situation in Greece and the poverty situation through financial aid, before it completely gets out of hand?

To conceptualize this economic crisis, one needs to understand Greece's financial history as an aftermath of its civil war. Despite the recovery of the country from war, Greece faced economic difficulties and had to run a budget deficit consistently. The economic situation led to Greece joining the European Union in 2001 instead of 1999 like other countries. However, Greece enjoyed an economic boom after joining the European Union as it enjoyed cheap loans facilitated by the Union (Alderman et al. n.p.). However, Greece was making its financial information private and exaggerated. The financial crisis of 2008 exposed the precarious nature of the Greece economy and the apparent mismanagement of money. The mismanagement was illuminated when the Greece government went bankrupt, pulling its citizens into bankruptcy. Although the government was able to recover from the bankruptcy minimally, its citizens were not able to recover. A good example is where military spending remained constant while soldiers' salaries and those of other professions were cut coupled by retrenchments and tax hikes (Buchanan n.p.). The government which has the mandate to protect the interests of its people was failing in its role as it was powerless to cushion its people from the financial woes.

In efforts to ensure the stability of Greece and that of the European Union and global financial markets, the EU attempted to alleviate the debt crisis. The EU borrowed money from its member states and gave it to Greece to stabilize the economy, what is now known as the bailouts. Instead of using the money it was given to expand economic activities, Greece used the funds to offset its enormous debt. The only issue is that this was not a sound economic decision as the funds from the EU could not settle all the accruing debts. The interest on the outstanding debt kept on piling up, plunging the country into more debt which went out of control. The problem is that the EU was so concerned about having the lenders, most of which are members of the EU, being paid than stabilizing the Greece economy. Essentially, the EU just gave Greece the money to fix the problem, but they did not view the problem as large enough to warrant investigators and economists to help stabilize the nation (The Economist n.p.). As much as the Greece Government is to blame for the debt crisis, the EU also carries a large part of the blame for the escalation of the debt situation. The Greece government should have been forthcoming regarding their economic situation which would have enabled the European financial market to be more efficient and careful around lending to the nation. On the other hand, the EU should have handled the crisis in a better manner rather than only issuing financial bailouts. The influx of war and economic refugees in Greece and other European countries put a strain and blindsided the EU on the issue of Greece debt situation.

As Greece was grappling with its economic problems, other nations in the middle east were faced with far worse problems of their own. Syria was grappling with a civil war and the influence of ISIS, a radical Muslim organization, whose violent activities also an already unstable Iraq. Consequently, refugees traveled, mostly on foot, from their countries in attempts to enter the wealthier nations in the north, such as Germany. Due to the increase in some refugees, countries in the EU adopted stricter border control policies (Tisdall n.p.). A majority of the refugees, therefore, were forced to remain in the Balkans, a geographical area that encompasses Greece, Serbia, and Turkey. Although a majority of refugees stayed in Turkey, a significant number of refugees had relocated to Greece. The only issue is that Greece itself was in no financial situation to play host to the refugees. Restaurants in Greece were already being used as homeless shelters by the Greeks themselves (Smith n.p.). With refugees coming in, the strain on the meager resources worsened. As the EU tried to solve the refugee crisis, the solutions to the conditions in Greece remained in limbo. In the refugee issue, the EU and Greece government were in no position to prevent it, and it only amplified the economic problems in Greece.

The refugee problem in Europe increased the Greece economic woes infinitely. As the European nations were under strain from the various bailouts to Greece and they were unprepared for the refugee crisis. Increased anti-refugee sentiments resulted in stricter border policies and evictions of refugees from such countries such as Germany. The refugees, therefore, mostly relocate to the nearest and friendly country, in this case, Greece. Although Germany and other European countries cannot afford to keep the refugees, the result is that evictions increase the problems of Greece, a country already at the tipping point.

Many people might consider the financial woes in Greece as only a Greek affair. Furthermore, why should an American like you and me care about the situation of a faraway country? Did the UK only have a reason to care before they left the EU due to the financial position of the EU? I do not want to imply that the situation in Greece would destroy the American and Global economies, not at all. But there is a reason for concern for all of us. A majority of governments are concerned by rates of poverty in their countries because poverty has a multiplier effect and it spreads. Have you ever considered why social classes are split into sections or why there are no mansions next to a trailer park or homeless shelter? The answer and the common belief among many economists are that when the impoverished conditions are out of control, they can lead to financial problems. This problem faces the EU as it takes funds from other well-off member states and tries to alleviate the Greek debt without a clear payback plan. As a result, European nations have to alter pricing of their goods, such as cars, and the countries are forced to increase their taxes resulting to less disposable incomes among their citizens effectively spreading the poverty arising from Greece. Low purchasing power among European citizens reduces a market upon which much of US exports depend on. If we export less, there will be more job cuts and the poverty effects emanating from Greece will be felt even here in the US.

I cannot claim that there is a clear and specific way to solve poverty and economic turmoil. If poverty were solvable, you would not be reading this. However, poverty situations can easily be managed. The financial crisis in Greece can be halted or slowed through better management. Halting poverty and economic deterioration give Greece time to repair and revive itself. Furthermore, there is the option of letting the financial situation happen giving Greeks a chance for a fresh start. Borrowing from my high school calculus teacher, I say "it is better to destroy and build over the ruins than to keep repairing and rebuilding the same thing."

In conclusion, the situation in Greece is very saddening considering that Greece was the place where modern-day philosophy and rhetoric took root. As the birthplace of organized democracy, it is hard to imagine the level of poverty that exists in the nation. With the Greek government's inability to arrest the unfortunate situation of their finances in time coupled with the failed feeble attempts of the EU to settle the crisis and the influx of refugees in Europe and the Balkans, the story of Greece darkens. Today, the most significant tragic tale of Greece was not Odyssey or Oedipus Rex, but the story of the country itself.

Works Cited

“What Greece Must Do to Receive a New Bail-Out.” The Economist, The Economist Newspaper, 14 July 2015, www.economist.com/blogs/economist-explains/2015/07/economist-explains-10.

Buchanan, Rose Troup. “Greece Debt Crisis Explained: A History of Just How the Country Landed Itself in Such a Mess.” The Independent, Independent Digital News and Media, 4 July 2015, www.independent.co.uk/news/world/europe/greece-debt-crisis-explainer-a-history-of-how-the-country-landed-itself-in-such-a-mess-10365798.html

Smith, Helena. “Greek Debt Crisis: 'People Can't See Any Light at the End of Any Tunnel'.”The Guardian, Guardian News and Media, 30 July 2017, www.theguardian.com/world/2017/jul/30/greek-debt-crisis-people-cant-see-any-light-at-the-end-of-any-tunnel.

Alderman, Liz, et al. “Explaining Greece’s Debt Crisis.” The New York Times, The New York Times, 17 June 2016, www.nytimes.com/interactive/2016/business/international/greece-debt-crisis-euro.html.

Tisdall, Simon. “Europe Seeks a Long-Term Answer to a Refugee Crisis That Needs a Solution Now.” The Observer, Guardian News and Media, 22 July 2017, www.theguardian.com/world/2017/jul/22/divided-europe-refugee-crisis-italy-serbia-greece.

November 23, 2022
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