...constant transformation of their economic structures. These fluctuations created economic instability due to rapid changes in devaluation and inflation cycles. After successfully joining the Eurozone in 2001, Greece’s economy progressed enormously. However, the Greek government acted irresponsibly with its fiscal policy and debt accumulation. Consequently, the created economic weaknesses became apparent during the 2008 global financial crisis. The Greek sovereign debt crisis has required multiple controversial bailouts. The bailouts that prevented Greece from defaulting, led to two opposing opinions from leaders of the members of the European Union (EU), (1) to support Greece to remain member of the Eurozone and, (2) to pressure Greece to exit the Eurozone. Greek constant economic restructuring Introducing the “populist policies” during election seasons were the core of Greek political parties strategy. Political parties were forced to craft and innovate new economic structures to gain support from the voters. In 1980s, for example, the notion of public protection and equal income redistribution strengthened confidence in Greek’s voters. The massive increase of the public spending (10% increase of the GDP from 1980 to 1990) caused turmoil in Greek economic structures. The newly elected government’s acquisition of Bank of Greece resulted in the Greek government having direct control of the country’s monetary policies. This caused dramatic economic impacts such as; public debt...
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...officials said they would stop the planned sale of the state’s majority stake in Greece’s largest port and dominant utility. They also pledged to rehire thousands of public-sector workers and reopen the country’s state broadcaster, which has been shut down by previous government.” - Bouras & Karnitschnig (Wall Street Journal, 2015) A beautiful European country on the Mediterranean, Greece was living on borrowed time. Since gaining independence from the Ottoman Empire in 1832 Greece has spent more than half its years in default. For generations the Political system in Greece has been driven by public service jobs. Politicians regularly handed out favors in the form of government jobs to attain votes. They also made working for the state an attractive proposition with better wages than the private sector and retirement after 25 years of service. This effectively meant that if you started working after completing university you could retire before the age of 50. This is a clear example of country club style leadership. In recent years the promises made by new political leaders led some to believe that change may have been on its way and Greece could be on the road to economic recovery. As it turns out the new promises of a new government were broken, just like those of previous administrations. Continually the world finds misguided leadership in Greece. Politicians focused on appealing to Greece’s citizens short term happiness in attempts to earn political favor rather than addressing...
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...International Political Economy - July 2011 Greece has been experiencing severe fiscal challenges for the past decade. The country’s economic and political situation has reached crisis level thus propelling it into the global lime-light, dominating headlines in print and electronic media. This essay seeks to explain the crisis and explore the implications for Greece, the European Union and the international political economy, should continued assistance not forthcoming. The source of Creek’s debt crisis is both domestic and international. Domestically, analysts point to high government spending, weak revenue collection, and structural rigidities in the economy. This affected the state’s ability to fund government budget and current account deficits, resulting in profound borrowing. As the situation progressed for the worst, the Creek economy relied heavily on international capital markets, which only aided in making the country extremely vulnerable to any shifts in investor confidence. Access to capital at low interest rates after adopting the euro, and weak enforcement of European Union (EU) rules concerning debt and deficit ceilings facilitated Greece’s accumulating high levels of external debt. In October 2009 investors became jittery due to the actions of the newly elected government in revising the estimate of the government budget deficit for 2009 from 6.7% of gross domestic product (GDP) to 12.7% of GDP (Nelson et al., 2010). A few months later, however, in April...
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...Introduction The Greek debt crisis in 2009 occurred as a result of an understated financial deficit and extreme spending. The stagnation of the Greek economy and the demotion in their debt rating did not aid their financial situation. Greece was then faced with the possibility of sovereign debt default. The failure of Greece to pay their debts required bailouts from the European Union (EU) and the International Monetary Fund (IMF). While the loan bailouts have eased short term liquidity problems, Greece still remained in financial turmoil which may even deteriorate. This research paper aims to explore the history behind the Greek debt crisis, the implications it has globally and on South Africa as well as the lessons that can be learnt from the crisis. Origins of the Greek debt crisis 2.1 Historical development: 2001-2008/09 In 2001 Greece became the twelfth member to join the Euro zone and was permitted to use the Euro (€) as its currency. Greece joined the Euro zone because of the benefits associated with being part of the Euro area. These benefits were essential to the economy of Greece who had a record of unpredictable inflation (Gibson, Hall & Tavlas, 2012). In addition, after Greece changed to the Euro they had the freedom to borrow money from foreign capital markets. During 2003-2007 government records showed Greece to be growing at 4% a year which gave investors’ confidence and made Greek bonds a popular investment...
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.... 2 3. THE WAY TO THE CRISIS...................................................................................................... 3 4. HOW DOES THE CRISIS AFFECT THE GLOBAL FINANCIAL SYSTEM? .................................... 4 5. WHAT IF GREECE LEFT THE EURO ZONE? ........................................................................... 5 6. IF GREECE HAS RECEIVED BILLIONS IN BAILOUTS, WHY IS THERE STILL A CRISIS? ............. 6 7. CONCLUSION....................................................................................................................... 7 8. BIBLIOGRAPHY .................................................................................................................... 8 1|Page Greek Sovereign Debt Crisis 1. Introduction The economy of Greece is the 45th largest in the world with a nominal gross domestic product (GDP) of $238 billion per annum. It is also the 51st largest in the world by purchasing power parity at $286 billion per annum. As of 2013, Greece is the thirteenth-largest economy in the 28-member European Union. Greece is classified as an advanced, high-income economy, and was a founding member of the Organisation for Economic Co-operation and Development (OECD) and the Organization of the Black Sea Economic Cooperation (BSEC). The country joined what is now the European Union in 1981. In 2001 Greece adopted the euro as its currency, replacing the Greek drachma at an exchange rate of ...
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...CHAPTER 3 : The global financial and economic crisis 3.1. The global financial and economic crisis has revealed the macroeconomic imbalances and structural weaknesses of the Greek economy. The global economy is in the midst of its most severe financial and economic crisis since the 1930s. The strong turbulence that started in the United States in August 2007 and spilled over to the rest of the world is continuing for the second year running, with occasional episodes of intensification. The persistence of the financial turmoil has caused the global outlook for output, employment and trade to deteriorate rapidly, especially during the last few months. At the current phase, developments in the financial and the real sectors of the global economy form a negative feedback loop, whereby the dysfunctioning of financial markets squeeze activity and, in turn, the fall in economic activity further undermines the capital position of the financial sector and its ability to finance enterprises and households. Exit from this vicious circle will not be easy or fast. The global crisis has negatively affected the Greek economy, especially since the intensification of the crisis in September 2008. The growth rate of the Greek economy, which had been steadily high since the second half of the 1990s, decelerated markedly in 2008, while economic activity is projected to stagnate in 2009. The financial crisis is affecting economic activity in Greece in two ways: on the one hand, the tightening...
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...Thomas L. Friedman TheWorld is Flat he explains the new “flat” playing field of world business created by a combination of technology and intertwined economies. In addition he notes that this global leveling can be both positive and detrimental. Evidence of one of the more detrimental effects of flattening is easy to view in the recent crisis of the Greek economy and its effect on the global economy. Greece is one of the smallest economies in Europe, however between the technological ease of information of the Greek economies woes being broadcasted incessantly and the interdependency of the European and other world markets, what was once a regional concern about the amount of debt amassed by a small economy has rapidly turned into a worldwide economic contagion. “Worries that over indebted Greece could default sent investors scouring for the next ticking debt bomb. The euro zone has quite a selection to choose from: Portugal, Italy, Ireland and Spain, which, along with Greece, form the aptly nicknamed PIIGS. Yields on the sovereign bonds of Portugal and Spain have already risen, a sign that investors believe holding their debt is becoming riskier.” (Schuman, http://www.time.com/time/magazine/article/0,9171,1987598,00.html) Greece’s economic turmoil combined with other EU member states poised to default has caused a global unease that endangers the recovery of the United States market as well. The U.S. was finally seeing some signs of growth after a trying recession but...
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...way it could further dampen global markets and adversely impact India’s economic growth. The Eurozone jitters have quite recently shown their impact on the country’s currency and caused it to downgrade and touch the lowest level of Rs.56.23 against the $ as on May 30, 2012. The situation in Europe is of particular concern as it accounts for a significant share of the global economy and is also India’s major trade and investment partner. Clearly, the situation in Europe needs major policy attention not just for Europe but for all major global economies, be it the emerging nations or the major developed economies. Eurozone Sovereign Debt Crisis: Background The Eurozone crisis is a term used to describe the soaring debt levels of five of the major Eurozone nations and their inability to pay off a part or whole of this debt that they have accumulated over the recent decades. These five nations including Greece, Portugal, Ireland , Italy and Spain have failed to generate enough growth for their economies to retain the bondholder’s confidence in their ability to hold the guarantee that they promised to deliver. The crisis that blew up has far reaching consequences extending beyond the national boundaries of these five nations painting a gloomy picture for all the major global economies. This sovereign debt crisis has its roots in the global crisis of 2008-09 that shook the world economy and paved the way for the debt crisis in Europe. The global economy including the Eurozone countries...
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...Topic: PIIGS (European debt crisis) 吳宇綸D0131292 劉昱顯D0131156 王謙 周雋彥D0125599 Contents 1. Introduction 2. Overview of the European sovereign debt problem 3. Relief measures of the European sovereign debt crisis 4. European debt crisis 5. Conclusion 6. References I. Introduction The PIIGS is a group that composed of five countries that have some commonality in location and economic environments. In this case, PIIGS includes Portugal, Italy, Ireland, Greece and Spain. The countries which be mentioned are all part of European Union members and have been noted for having weak economics and bad situation of financial problems. In 2008, economic crisis came to all over the world, during the worldwide economic crisis, Portugal, Italy, Ireland, Greece and Spain began to come out the grave and serious concern in the European Union refer to the enormous amount of sovereign debt that they were carrying. The problem with the PIIGS is that speculators dropped, compounding their debt issues and the situation might be much more worse. Many European Union members were also unwilling to rescue these struggling nations although when it became very clear that assistance would be needed. The sovereign debt crisis sparked a number of conversations about reforming financial policy in the European Union to prevent similar problems in the future. The members of PIIGS felt displeasure at the negative allusions and some have...
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...GREEK ECONOMIC CRISIS: CAUSES & EFFECTS Objective: To study the factors that lead to the Greek Economic Crisis and its effects on other other countries including India. A. IMPORTANCE Greece is normally known for mythology and coliseums, but for the past year, and probably well in to the future, Greece is making headlines for less mythical reasons. Greece has earned the reputation of being that family member who can't seem to get out of money trouble and, in turn, is always asking for a loan. Also, like that same family member, the chances of getting that money back isn't high. Greece is on the brink of bankruptcy and many economists believe that they are already bankrupt. Greece's debt has reached 160% of their gross domestic product. When debt reaches 100% of gross domestic product, it is cause for major concern. What's worse, they don't have the capacity to do much about it. Greece can't artificially change the buying power of their currency because they are part of the eurozone, and they can't easily raise taxes because they don't have an efficient or well-developed system of collecting taxes. If all of that isn't enough, the citizens of Greece are growing increasingly upset with their government, which is causing political turmoil as well as economic. Greece owes so much money to other countries that each citizen owes $40,000! 1. We Live in a Global World The world is no longer a collection of countries, many of which have little effect...
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...What is the European Debt Crisis? By Thomas Kenny, About.com Guide See More About: * economics * europe * bonds ------------------------------------------------- Ads LIC Pension 1.45 करोड़छोटा निवेश जो आपको करोड़पति बनाये = PensionPolicyBazaar.com/PureInvestment Mobile Trading On-the-GoTrade Forex, Commodities, CFDs. Low Fixed Spread, Start Now!www.4xp.com/Mobile What is Sensex?You don’t need tuitions to learn. The First Step Kit teaches enough.Sharekhan.Sharekhan-Firststep.com Bonds Ads * Bonds * Debt * European Crisis * Type of Bonds * AAA Corporate Bonds ------------------------------------------------- Ads Investment CalculatorA Free, Safe & Simplified Tool for Managing Your Money. Try It Now!www.perfios.com/managingyourmoney Looking for Major Debt?Find Major Debt on Facebook. Sign Up Free Now!www.Facebook.com The European debt crisis is the shorthand term for the region’s struggle to pay the debts it has built up in recent decades. Five of the region’s countries – Greece, Portugal, Ireland, Italy, and Spain – have, to varying degrees, failed to generate enough economic growth to make their ability to pay back bondholders the guarantee it’s intended to be. Although these five were seen as being the countries in immediate danger of a possible default, the crisis has far-reaching consequences that extend beyond their borders to the world as a whole. In fact, the head of the Bank of England referred to it as “the most serious financial...
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...Contents Introduction 3 Timeline of the Greek Debt Crisis 4 Causes 8 Internal 8 1. GDP growth rates 8 2. Unrestrained spending 11 3. Greek public debt 12 4. Statistical credibility 14 External Causes of the Greek Crisis 14 Influence on the evaluation of the crisis 15 Impact of the crisis on the country's macroeconomic indicators 18 Conclusion 22 References 24 Introduction International crisis 2008 has not only exacerbated the Greek economic situation, but has also intensely brought forward the economy’s deeply rooted and chronic weaknesses. The main argument of the paper is that the main cause of the Greek economic crisis is not the recent global economic instability, neither the outcome of political management practices of the latest Center Right government (2004-2009). Rather, the situation in Greece is the obvious outcome of a series of incorrect government choices and omissions during the last three decades and not a recent phenomenon at all. Greek economy fulfills the main criteria of a “weak economy”. Economic and fiscal measures undertaken by the Socialist government under the guidance of the IMF will fail to succeed unless they are followed by clear, transparent development initiatives, which is not the case until now. The purpose of this paper is to approve that the current Greek crisis is the consequence of inappropriate domestic policy. This paper has the following tasks: • to depict the timeline of the Greek debt crisis • to its causes: internal...
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...European debt crisis continue to bring influences to the global economy during the week. , During the week, “Standarad and Poor’s (S&P) downgraded Italy’s credit rating from a A+/A-1+ to A/A-1” beacuse of “Italy’s weakening economic growth prospects” and “a view that its governing coalition would limit the government’s ability to respond decisively.” Such a downgrade affects the Australian Forex falling “to a five-week low” and economists expected that currency market is “driven by further news on eurozone debt woes.” Moreover, the three top US banks, Bank of America, Wells Fargo and Citigroup was downgraded by Moody’s because of “the US givernment less willing than before to rescue them if they become unstable.” Such news bring influences to Australia Forex and causing it “trading near its 10-month low as traders worry about a possible recession in the US and Europe.” I was thinking to change my trading position to sell rather than buy for Australia Forex as I found that the market expectations were mianly different from my positive expectations.. However, “Westpac New Zealand senior market strategist Imre Speizer said the mood on currency markets was slightly more positive on expectations world central bankers and finance officials were closer to a decision ona more comprehensive solution for Europe’s debt woes.” Such news gives me confidence that once there is a solution to the present situation to Eurozone the Forex market could rise. Rather than that, another news saying...
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...INTERNATIONAL ECONOMY Globalisation, World trade, Multinational, Exports and imports. Advances in transportation and communication has made the exchange of information and goods and services much more efficient between people and countries, thus making the world seem like a small place. This is referred to as globalisation. The world has become connected in many different ways such as in a cultural, religious, and economical way. Two centuries ago countries only traded within their boarders and the only thing closest to international trade was when explorers such as Vasco Da Gama and Christopher Columbus sailed to undiscovered lands and traded goods such as copper, diamonds, gold and spices. In later years international trade within Europe started to grow, for example neighbouring countries such as France and the U.K traded consumer, capital and military goods with each other. International trade today is enormous, in 2010 global exports and imports were $37 trillion, which is 58 percent of the value of global production. The United States is the largest global trader as it accounts for 10 percent of world exports and 13 percent of world imports, China comes second then Germany third. World trade has made all individual national economies heavily dependent on each other, for example the fall of the United States economy or the appreciation and the depreciation of the United States dollar affects all other economies. A good example of international financial...
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...| About IMF The International Monetary Fund (IMF) works to bring up International Monetary Cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth and to reduce the poverty around the world. IMF was created in 1945 and it’s an organization of 187 countries. Why IMF was created and how it works? The IMF, also known as the “Fund,” was conceived at a United Nations conference convened in Bretton Woods, New Hampshire, United States, in July 1944. The 44 governments represented at that conference sought to build a framework for economic cooperation that would avoid a repetition of the vicious circle of competitive devaluations that had contributed to the Great Depression of the 1930s. Work of IMF The primary mission of the IMF is to provide financial assistance to countries those countries who experience financial and economic difficulties and to sought those difficulties they are given financial help by using funds deposited with the IMF from the institution’s 187 member countries. Member of IMF states with balance of payments problems, which often arise from these difficulties, may request loans from IMF to help fill gaps between what countries earn and/or are able to borrow from other official lenders and what countries must spend to operate, including covering the cost of importing basic goods and services. In return, countries are required to launch certain reforms which have often been dubbed...
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