Friday, November 11, 2011

Greek Debt Crisis

The problem of a growing debt in Greece increased when Greece swiched their currency to the euro. Government spending greatly increased when this swich occured sending the conntry into a plunging debt. During the time after this swich there was widespread tax evasion that allowed for the ratio of money flowing out of the government verus flowing in to be greatly skewed. When the international financial downturn occured Greece was far from prepared and because of this two bailouts were asked for in May 2010 and July 2011 at 110 billion euros and 109 billion euros each with the hoped for effect of controlling the crisis but with Portugal and the Irish Republic needing bailouts of there own, control of the crisis did not occur. When Greece asked for their third bailout in October they were denied and the question from the eurozone of whether Greece should be allowed to stay on the euro was raised. With no more bailouts Greece is having to go through extreme government spending cuts as well as raising taxes to account for this declination. This is causing Greece to fall into a reccesion which leads to higher unemployment and more benifit checks from the government, what seems like a downward spiral. With Greece now at a debt of about 340bn euros or $435bn it seems like there is no clear way out for them.
Lauren Edmond

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