Modern Greece and Its Economy Problems

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Greece is a European country with a long history. However, nowadays, someone who hears the word “Greece” might immediately think of the classic movie Grease, or the beloved shine of a pepperoni pizza. It’s important to remember Greece was once home to world changing philosophers. Socrates and Aristotle for example, are two common idols of Ancient Greece. There is documentation of writings that go all the way back to 800 B.C. in Ancient Greece. Modern day Greece is in the same location as Ancient Greece. Even though it’s in the same place, Greece has lost the pride it once had.

Greece is the Southernmost country of the Balkan Peninsula. A peninsula is defined as a piece of land that is surrounded by water on the majority of its border while still being connected to a mainland from which it extends. The climate in Greece is typical of the Mediterranean climate: mild and rainy winters, relatively warm and dry summers and, generally, extended periods of sunshine throughout most of the year. Due to topography, there’s a lot of climate subtypes in the Mediterranean climate, mountain chains are found in the center of Greece. A year can be categorized into two main seasons. One being cold and rainy which lasts from mid-October until the end of March, the other being warm and dry, that of course being the rest of the year. Even though it’s over all a beautiful place to live.

The families who live there are close-knit and lead simple lives in modest homes or apartments. Several generations living in the same home is not uncommon. Often times, young people live in their family home until marriage. Families are close-knit lead simple lives in modest homes and apartments. Family traditions are very strong, its likely young Greek descendants honor the wishes of their Great Grandparents. In Greece religion is very influential, the main religion is Greek Orthodox faith. The fact of it being a good place to live is up for debate, considering, they are in massive debt.

While there are some urban areas like Athens are wealthier than others, a large percentage of Greeks struggle to make ends meet and work day-to- day jobs or are small business owners. If they’re fortunate enough to even be at that level. Higher education is highly valued and a symbol of class and success. It is taught education leads to freedom, respect, and autonomy. The goal of education is important to succeed as an individual. Maintaining respect for a family name is also vital. Shame is brought onto the whole family if a member does something disgraceful.

Meanwhile, it could be easily argued that Greece’s economy is disgraceful as well. They owe absurd amounts of money to banks and other European countries. Despite this, some of these countries have agreed to assist Greece. However, there are conditions that must be upheld for Greece to be assisted. Greece must change things so what’s owed is reduced. Including, Greeks paying higher taxes, and elderly people’s pensions being less. Essentially, middle aged workers’ pay more, then later in life, when they should be able to enjoy retirement, they get paid less. This will be the third time the European Union has given Greece a bailout. A bailout is an act of giving financial assistance to a failing business or economy to save it from collapse. From this bailout Greece will receive 86 billion Euros over the course of the next three years, according to an EU (European Union) statement.

Their total debt is 323 billion Euros, which they owe to various countries and banks within Europe. The question is, what are they going to do if they get the 86 billion Euros? They must have done something to get themselves into this mess to begin with, and then the fact that this isn’t the first chance Greece has had to improve. The trouble first started in 2001 when Greece began to use the Euro is place of the drachma as currency. Greece had been part of the European Union since 1981 but wasn’t allowed in the Eurozone until now. Its budget deficit had been too high for the eurozone’s Maastricht Criteria.

Everything was fine for a couple of years. Similar to other countries who also used the Eurozone method, reaped the rewards of being in the eurozone. Being in the eurozone lowered interest rates and brought in investment capital and loans. In 2004, Greece admitted to lying in order to get around the rules of being permitted in the eurozone. The EU didn’t ban Greece for three reasons.

The first being France and Germany were also spending above the limit at the time. It would be an injustice for Greece to be punished while to leading countries were guilty of the same thing. Also, there was uncertainty on exactly what applies. They could expel Greece, but that would be disruptive and weaken the euro. Lastly, the European Union’s goal was to make the power of the euro stronger internationally. A strong euro would convince other EU countries, like the United Kingdom, Denmark, and Sweden, to adopt the euro. As a result, Greek debt continued to rise until the crisis erupted in 2009.

In 2011, other European countries who knew a lot about Greece’s problem tried to help, the act was led by France and Germany. The two countries gave hundreds of billions of euros and somehow, it still wasn’t enough. Europe’s leaders decided that the banks that had lent money to Greece should agree to cut the amount the country owed them by half – and that European governments would give Greece even more money. But all of this came with strict conditions – that Greece must stop spending so much money. Many people in Greece weren’t happy with the conditions and there were lots of protests on the streets against the government’s plans to raise taxes and cut spending.

Leaders of the European Union were finding it difficult to find a solution to the country’s debt problem. Greece wanted the EU to forgive some of the debt. But the EU wanted Greece to have consequences. The biggest leaders were Germany and its bankers. They were advocates for austerity measures. Believing that course of action would give Greece an advantage in the marketplace worldwide. Austerity is a political-economic term referring to policies that aim to reduce government budget deficits through spending cuts, tax increases, or a combination of both. The austerity measures required Greece to improve how it managed its public finances. It required modernization of its financial statistics and reporting. It lowered trade barriers and increased exports.

The most notable change refers back to the pension situation mentioned above. Greece had to get rid of its pension system. 17.5 percent of GDP was taken up from Pension Payments, higher than in any other EU country. Public pensions were underfunded by nine percent, whereas other nations were only three percent. Austerity measures forced Greece to cut pensions by 1 percent of GDP.It also required a higher pension contribution by employees and limited early retirement. Twenty percent of Greeks are 65 or older and qualify for pensions. Meaning Half of Greek households relied in pension income. People didn’t like that they had to pay so the elderly can get higher pensions.

In June of 2015 the severity of the problem truly showed, after banks shut down for a week. Greece shut down its banking system, ordering lenders to stay closed for six days starting Monday, and its central bank moved to impose controls to prevent money from flooding out of the country. As a result, the Greek Stock Market was closed for that week as well. Citizens were rightfully outraged. “How can something like this happen without prior warning?” asked Angeliki Psarianou, as she stood outside an empty ATM, late on evening, “I want Tsipras to tell me how I am going to make it through the week with €10 in my bag with rent coming up. It has never been as bad as this.”

Banks in Greece ended up being closed for more than week, the only access citizens had to money was through ATM machines. Even then, people couldn’t collect more than 60 Euros at a time. This happened after the European Central Bank, which has been giving Greece money, decided not to give them any more. Central bank acted this harshly because Greece couldn’t reach an agreement with them.

In attempts to save money, the government spent less on schools and hospitals Almost everything has become more expensive to buy, from petrol to food. The public has paid more tax on what they’ve earned. Because of Greece’s “money trouble” unemployment rates are extremely high. A staggering 18% of Greeks don’t have jobs. Greece has borrowed a substantial amount of money over the past ten years. Whether it be from European banks or other countries’ governments, there is no denying, Greek people should be thankful for what they’ve been leant. Not only is Greece needing to fill their debt, but the added interest has to be taken into account. When money is borrowed, ‘interest’ must be paid, meaning additional money is owed on top of the amount that was originally given.

If the unthinkable thing of Greece completely running out of money were to happen, there would be huge problems in European countries and banks. In the act Greece losing all their money, the countries that once assisted Greece would lose all the money that was leant. European countries buy so much of our stuff, what happens to those countries would affect Britain too.

In conclusion, the country Greece has undergone a lot. It’s reputation also changes immensely as time goes on. It used to be an exciting vibrant place to live, where some of the best minds existed. Greece culture still holds traditional values of family being extremely important and close as well as educational being the key to success. It’s a beautiful place to live as well. Yet, beneath the surface Greece’s economy is suffering. It’s believed by some that the reason Greece so bad financially is because the switched to the euro in 2001. Based on the timeline of events, this seems fairly accurate. Greece is still in heavy debt, but countries are working together to try and get control of the situation.

Cite this paper

Modern Greece and Its Economy Problems. (2021, Jun 27). Retrieved from https://samploon.com/modern-greece-and-its-economy-problems/

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