The Greek Debt: Where it All Began

Now you may wonder where Greece’s debt may be coming from. Just like how debt works, Greece ended up spending more than they had. As Greece changed their currency from the drachma to the euro, Greece had high expectations to live up to the other 16 prosperous countries in order to enter in the European Union (EU).

In 2004, Greece was graced with the opportunity to host the 2004 Summer Olympics. Now with the expectations of topping the previous hosts of the Olympics, Greece dropped a heaping $11 billion (US dollars). But what sank the economy were the country’s “early retirement age, generous benefits, and mass tax evasion”. With taxes unpaid, the government turned European banks to borrow money.

Why is Europe so worried about Greece?

With Europe not as financially stable as they used to be, Greece’s failing economy would be too much for the EU to handle. It would affect the currency and all the countries using the euro.

Why won’t the Greeks let the EU bail them out?

Bailout would mean the European banks take out “50 cents for every dollar owed” by the Greeks. But a bailout would mean Greece would not have the benefits they are enjoying now, and their economy would also shrink. Is Greece’s debt cut in half worth all the riots that may ensue if the Greeks are cut off from their benefits? Who knows? All we know is the world does not need another country headlining “Riots Take Over.”

Citations:

Kreig, Gregory J. (2011, November 4). Web. Retrieved from http://abcnews.go.com/blogs/headlines/2011/11/an-idiots-guide-to-the-greek-debt-crisis/

Coppola, Frances. (2012, November 22). Web. Retrieved from http://euronomist.blogspot.com/2012/11/what-will-happen-to-greek-debt.html