StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Euro Crisis in Terms of the Greek Debt - Research Paper Example

Cite this document
Summary
This research paper "Euro Crisis in Terms of the Greek Debt" discusses alarming factors are been considered regarding the sustainability, prevention, and spread of the financial crisis in Europe, and how the European countries have to work together and ensure that the financial crisis ceases…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER95.2% of users find it useful
Euro Crisis in Terms of the Greek Debt
Read Text Preview

Extract of sample "Euro Crisis in Terms of the Greek Debt"

? Euro Crisis in terms of the Greek debt issue Euro Crisis in terms of the Greek debt issue Introduction Greece had experienceda rapid growth in its economy in the year 2000. The economic growth of Greece during this time was regarded to be the fastest growing in Europe (James, 2001). This caused the government miscalculated its budget and planned to introduce defensive strategies since Greece and Turkey were experiencing some political and economical differences. The investment of the government of Greece took a wrong turn since between mid 2000s and 2010 the economy begun to depreciate worldwide. This aspect caught the government of Greece unawares because the expenditure that had been made on the defense equipments was so high meaning that the rest of the country’s economy had been under budgeted. The major economic sources that comprised of tourism and the shipping industry were adversely affected by the economic deterioration that had hit all parts of the world. Lack of monetary fund to plan and budget for the governmental and non-governments needs arose in 2010. This caused the government of Greece to request for a loan in late April in the year 2010 from the European Union and International Monetary Fund (IMF) so that it could be able to cater for its needs and the needs of its citizens. Researchers announced few days after the issuing of the loan that the Greek government could not be able to repay the loan thus the investors that have invested in the Greek government and companies risked losing almost half of their investments. This announcement caused fear among the investors, existing and willing investors, and they withdrew from their original plans to avoid further losses. Effects of the crisis of Greece The Greek government had to introduce drastic measures that led to the infliction of high economic standards to the citizens of Greece in May that year. The high cost of living and low-income rates due to high taxes and other governmental requirements made the Greek citizens to have a series of peaceful protests, which later turned into social instability and riots in Greece. The International Monetary Fund in conjunction with European Union intervened and added an additional loan to the Greek government in 2011 on condition that it could regulate the flow of money and economy (James, 2001). In addition, Greece was supposed to come up with a structure of repaying the loan. This structure was to be produced by the Greek government and agreed upon by the International Monetary Fund, European Union and the Greek government. The European Union gave pressure to the prime minister of Greece due to the improper management and governance during his regime and threatened to withdrawal part of the loan that they were supposed to process for the Greek government. This led to George Papandreou step down to give room for an election of a new and focused regime to cover for the damages caused and give room for more external and internal donations and loans. The resigning of the prime minister caused or led to the release of the percent of the loan that had remained and the appointment of an interim prime minister to take control of the debt repayment and proper use of allocated funds. Scholars and economic analysts has been following up the case of the Greek economic break down and that of the European Union and are suggesting a possible break through for the European nations. The economic analysts are suggesting that the Greek government should stop using Euros and bring back its former currency, drachma, as its currency until it stabilizes. However, this would result in a political and economical instability and deterioration (Drazen, 2011). Some scholars argue that the reintroduction of the drachma would result to a more than 50% fall in its value if Greece chose to drop the use of Euro. This would mean that that the Greek government would suffer from high rates of inflation and there are possibilities of riots, military coups and war. In order to avoid this outcome, the European Union together with the International Monetary Fund decided to add an additional loan to the Greek government in 2012. This was agreed upon the realization that there would be an initiation of riots and war (Drazen, 2011). The agreement made by IMF and EU with the Greek government is regarded as the biggest debt to be restructured. Greece was given bonds that had low interest rates and a longer repayment period. The investment of the government of Greece took a wrong turn since between mid 2000s and 2010 the economy begun to depreciate worldwide. This aspect caught the government of Greece unawares because the expenditure that had been made on the defense equipments was so high meaning that the rest of the country’s economy had been under budgeted. Scholars and economic analysts has been following up the case of the Greek economic break down and that of the European Union and are suggesting a possible break through for the European nations. Economic analysts and researchers that Greek government should drop the use of euro and bring back its former currency, drachma, as its currency until it stabilizes, have suggested it (Bernanke, 2000). European Debt Crisis The European debt crisis is a monetary constraint that has affected some of the governments in Europe that use euro as their medium of exchange and thus resulting to the intervention of other countries or organization to enhance the stability of these governments. There are several countries that have been hit by the economical crisis in Europe but the mostly affected is Greece. The effect of the debt crisis hit the European countries in 2009 and caused ripples to the investors who had already invested in companies and institutions in the affected counties. The upcoming investors had to withdraw from investing their resources in the affected countries because the feared losing their investments (Boone & van den Noord, 2011). The debt crisis has risen and appeared in few countries in Europe but its effect has been felt all over Europe since the investors and other business and economic partners have a negative attitude towards the European countries (Cerra & Saxena, 2008). There is a notion that the debt crisis can spread to the other European regions thus instillation of fear in the investors. Three countries are mostly affected by the debt crisis. These countries are Greece, Portugal and Ireland. Causes of the Debt Crisis Various factors and aspects lead to the debt crisis in the European countries. Various research practitioners have conducted research on the causes of the financial crisis and have had to base their research from earlier days before the crisis even occurred. This is effective in ensuring and indicating the different types and factors that contributed to the problem. According to the conclusion drawn by the different research practitioners, the social, economical and political aspects influence the causes of the financial crisis. These factors can be listed as, Globalization of finance- the finance of different countries and nations are limited and compressed to use a centralized form. This means that the different currencies are changed to a uniform currency. High rates of lending and borrowing between 2002 and 2008- This contributed immensely since the rate at which loans were finalized and received were high thus causing higher borrowing and lending rates. Lack of balanced international trade- This was caused by the development of other alternative goods and services from other competitors. In 2008, the economic growth and development was sluggish and thus the income and revenue realized could not balance with the level of output and labor produced in the production of the goods and services. The effects of the debt crisis came into being when the investment of the government of Greece took a wrong turn since between mid 2000s and 2010 the economy begun to depreciate worldwide. This aspect caught the government of Greece unawares because the expenditure that had been made on the defense equipments was so high meaning that the rest of the country’s economy had been under budgeted. The Greek government had to introduce drastic measures that led to the infliction of high economic standards to the citizens of Greece in May that year. The high cost of living and low-income rates due to high taxes and other governmental requirements made the Greek citizens to have a series of peaceful protests, which later turned into social instability and riots in Greece. The release of the percent of the loan that had remained and the appointment of an interim prime minister to take control of the debt repayment and proper use of allocated funds avoided immense repercussions by the Greece citizens on the Greek governance. Scholars and economic analysts has been following up the case of the Greek economic break down and that of the European Union and are suggesting a possible break through for the European nations. There is a notion that the debt crisis can spread to the other European regions thus instillation of fear in the investors. Three countries are mostly affected by the debt crisis. These countries are Greece, Portugal and Ireland. The debt crisis has risen and appeared in few countries in Europe but its effect has been felt all over Europe since the investors and other business and economic partners have a negative attitude towards the European countries. Conclusion There are very alarming factors are been considered regarding the sustainability, prevention and spread of the financial crisis in Europe. The European countries have to work together and ensure that the financial crisis ceases instead of developing to other countries (Bosworth & Flaaen, 2009). The International Monetary Fund in conjunction with European Union has to intervene and add an additional loan to the affected countries to avoid further financial crisis and high costs of living. References Bernanke, B. (2000). Essays on the Great Depression. Princeton. Princeton: University Press. Drazen, A. (2011). Political economy in macroeconomics. Princeton: Princeton University Press. Boone, L. & van den Noord, P. (2011). 'Wealth effects on money demand in the euro area', Empirical Economics 34, 525-536. Bosworth, B. & Flaaen A. (2009). America's financial crisis: the end of an era. The Brookings Institution. Cerra, V. & S.C. Saxena. (2008). 'Growth dynamics: the myth of economic recovery'. American Economic Review. 98, 439-457. James, H. (2001). The End of Globalization. Lessons from the Great Depression. Cambridge, Massachusetts: Harvard University press. Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Euro Crisis in terms of the Greek Debt Issue Research Paper”, n.d.)
Retrieved de https://studentshare.org/finance-accounting/1448661-how-defaulting-the-greek-bond-could-ease-up-the
(Euro Crisis in Terms of the Greek Debt Issue Research Paper)
https://studentshare.org/finance-accounting/1448661-how-defaulting-the-greek-bond-could-ease-up-the.
“Euro Crisis in Terms of the Greek Debt Issue Research Paper”, n.d. https://studentshare.org/finance-accounting/1448661-how-defaulting-the-greek-bond-could-ease-up-the.
  • Cited: 0 times

CHECK THESE SAMPLES OF Euro Crisis in Terms of the Greek Debt

Comparison between the Greek Crisis of 2010 with the Argentinean crisis of 2001

The magnitude of the greek crisis is much more and consequences much graver due to the ongoing crisis in the global financial markets.... In this paper we studied the emergence of the greek Crisis in Europe at the backdrop of the global crisis.... Our method of analysis has been mostly a comparative study of the greek crisis with the Argentinean crisis and an advantage and disadvantages of the solutions Greek can adopt.... This paper attempts to study the greek Financial Crisis of 2009 and the Argentinean Crisis of 2001 in a comparative framework....
29 Pages (7250 words) Dissertation

European Sovereign Debt Crisis during 2010-2011

2010) On April 23rd 2010, the greek government made an official request to be assisted by the IMF in conjunction with the euro zone countries because its statistics had shown a major crisis in its part to raise the funds to repay what they owe other countries.... Introduction There was a European sovereign debt crisis that raged this region in 2010 and 2011.... The financial institutions of many European countries collapsed; there was increased government debt....
9 Pages (2250 words) Essay

Past and Ongoing Negotiations and Decisions made to Curb the Euro Crises

The crisis has threatened to total collapse of the greek economy and the Eurozone currency.... ome assumed that the Greek bonds were similar to German bonds in terms of riskiness.... In 2009, the crisis intensified with the worsening of the Greece debt situation.... The assumption was grounded on the fact that greek and Germany have similar currencies.... This research paper "Past and Ongoing Negotiations and Decisions made to Curb the Euro Crises" focuses on the negotiations in the Euro Crises and the decisions made from the beginning of the crisis....
7 Pages (1750 words) Research Paper

Debt Crisis in Europe

The Euro zones' financially concerned economies, particularly Ireland, Portugal, Greece, Italy and Spain, generated a stern crisis of In October 2009, the beginning of the global financial crisis in addition to Greece public debt admittance, glimmered shock throughout global markets as the full extent of Euro zone debt levels occurred (3).... This paper will analyze the causes of this debt crisis, possibility of its persistence, its implications as well as some mitigation measures to curb the crisis....
7 Pages (1750 words) Essay

European Sovereign Debt Crisis during 2010-2011

The paper 'European Sovereign debt Crisis during 2010-2011' is a dramatic example of a finance & accounting term paper.... There was a European sovereign debt crisis that raged this region in 2010 and 2011.... The paper 'European Sovereign debt Crisis during 2010-2011' is a dramatic example of a finance & accounting term paper.... There was a European sovereign debt crisis that raged this region in 2010 and 2011.... The financial institutions of many European countries collapsed; there was increased government debt....
8 Pages (2000 words) Term Paper

Euro Crisis in Terms of the Greek Debt Issue

The paper 'Euro Crisis in Terms of the Greek Debt Issue' is a dramatic example of a macro & microeconomics case study.... The paper 'Euro Crisis in Terms of the Greek Debt Issue' is a dramatic example of a macro & microeconomics case study.... Researchers announced few days after the issuing of the loan that the greek government could not be able to repay the loan thus the investors that have invested in the greek government and companies risked losing almost half of their investments....
6 Pages (1500 words) Case Study

Greece and the Euro Zone Crisis

This thesis "Greece and the Euro Zone Crisis" discusses the greek crisis that is the best evidence of the failure of the capitalist model of governance.... The sovereign debt crisis for Greece in 2009 has demolished its socio-economic model prevailed from 1994 to 2008 which period was characterized by high public indebtedness.... The international media orchestrated 'debt crisis' for the past three years has been actually due to the existing 'unfair and immoral' capitalist system which is claimed to have triumphed over Marxist economics by the neoliberal and Keynesian economists....
19 Pages (4750 words) Thesis

Past and Ongoing Negotiations and Decisions Made to Curb the Euro Crises

The crisis has threatened to total collapse of the greek economy and the Eurozone currency.... The crisis has threatened to total collapse of the greek economy and the Eurozone currency.... The crisis spread to involve political as well as economic crisis in the entire Eurozone.... In 2009, the crisis intensified with the worsening of the Greece debt situation.... The crisis has threatened to total collapse of greek economy and the Euro zone currency....
7 Pages (1750 words) Essay
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us