The Greek Financial Crisis

Friday, August 13, 2010 Posted by RuninDC
"Greece brought us Sophocles and his tragedies.  Now another huge "modern" travesty is unfolding right in front of eyes."

Is the country of Greece  -- the societies that brought the ancient world to its height in art, culture and warfare -- about to fall apart?

Will this country's crisis bring an end to the European Union?

Will Greece become insolvent?

The 2004 Olympics

In the early part of this decade, Greece was basking in glory.  Greece was preparing for the return of the olympics since the very first International games were held in Athens in 1896, when 13 countries participated.

Greece has not exhibited much discipline in spending.  Since the 1997 when Greece won the bid to hosts the games, construction was slow and costs had soared.  And today, not only is Greece still paying for the olympics, but the Olympics has not helped Greece's bottom line.

Greece Greed

Many young people I spoke with told me that the crisis in Greece was caused by greed, overspending and severe fiscal irresponsibility.

Neo liberalism empowers private corporation and banks who lend money and become richer and more powerful.  It is a label for the economic liberalism which has become increasingly popular worldwide in the last 40 years.

This type of economy de-emphasizes government intervention and instead focuses on the free-market

In the US, President Reagan and the Republican Party were the leading proponents of new liberalism.  One of the main pillars of Reaganomics was to reduce government regulation of the economy.

A similar situation of a smaller scale occurred a few years ago in the US with the emergence of the sub-prime mortgage business and the government's inability to regulate business.  Read the post on Runin Economist

Greece and the IMF

Breaking News: The IMF has given Greece a Euro 30 Billion three-year loan as part of a joint EU-IMF Euro 110 billion financing package.  As a result, Greece will have to agree to implement some harsh steps.  First, the government will cut the public sector workers' pay by 20%, raise the retirement age, increase sales tax to 23%, increase the price of tobacco products, alcohol and gas by 10%, increase taxes on property and businesses, etc.  Even if all these measures are implemented, Greece's debt could actually continue to skyrocket while their economy shrinks drastically.

Now I see why the people of Greece are really upset.

It seems in Greece, the crisis was caused by corruption and cronyism.  In addition, the country was not diligent in collecting taxes from all its citizens. Now the common people will have to pay for the mistakes and crimes of those in the government and corporate world.

Greece brought us Sophocles and his tragedies.  Now another huge "modern" travesty is unfolding right in front of eyes.

The Young Voices

I had met so many young people all around Athens who told me that they were ashamed.  Despite their degrees, they didn't have a job.  There was no hope; their country had no future.  This is why they are speaking out; this is why they are protesting.

Impact on Tourism

With the economy in sad state, I am happy to be in Greece to patronize its tourism business. So far this summer, the tourism industry has taken a huge hit.  During the protests, many of the ancient sites were closed, and many tourists were afraid of the violence reported in the news.  Meanwhile neighboring Turkey has gotten a boost in tourism.

Hopefully, London can make their 2012 Games profitable and within budget.

Hopefully Greece will not become insolvent like Iceland and Dubai.

Hopefully, the world can learn from Greece's mistakes.

Hopefully, the young people I met in Athens were wrong -- They don't need to be ashamed and they do have a future.
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