Greek Debt the European Commission Research Paper

Pages: 6 (2426 words)  ·  Bibliography Sources: 6  ·  File: .docx  ·  Level: Master's  ·  Topic: Economics

SAMPLE EXCERPT . . .
The plan that was put into place was designed to force a reduction of the annual rate in progressive amounts until it would be as low as 2% by 2013 (Europa, 2012). This would allow for projections of actually reducing the actual public debit in total even closer to the 60% maximum required still by the treaty arrangements. Some investors (Oliver, 2010) are highly skeptical that even these steps will succeed, but they also know that it would be difficult for even the EU to do more. Allowing Greece to go bankrupt or pushing it out of the Euro Zone would force it into a weaker position with its banks and would require even more collective loan relief. In addition, the country no longer has its own currency, so forcing it out might require it to restate the loans in under conditions that could hurt others (not to mention raise constitutional questions about who would have to pay for loans or other types of support). If Greece left, other troubled countries could just as easily follow. The draconian changes that Greece must otherwise undertake to bring its system back into line, however, have already dramatically increased inflation and unemployment, which also weakens its ability to repay its loans and further worries bankers.

From the viewpoint of looking at why Greece and the Euro Zone are in this position, it is worth examining how others have approached the subject. A recent publication by the Rosa Luxemburg Foundation put together a brochure that seeks to confront German stereotypical assumptions about Greece and its economic situation. It is worth looking at because it addresses many of the type of considerations that have likely locked Greece into its current position (Kaufman, 2010) .Buy full Download Microsoft Word File paper
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Research Paper on Greek Debt the European Commission Assignment

The piece begins by noting that there is a widespread belief by Germans and others that Greece deserves what it is getting and must find its own way out of the problem. It lied its way into the Euro Zone and has spent too much money on people who work too little for all that they get from their public sector. So why should countries like Germany help them out. But the brochure goes point-by-point through what it calls 20 fallacies with a focus on how actually stands vis-a-vis other nations who are also hurting. For example, it looks specifically at just how deep the crisis is. It then turns to what amount to stereotypical considerations about Greek character elements that are often assumed to be true.

So have the Greeks been living beyond their means? Quite possibly, but so have other nations. The problem does not appear at this point to be their spending but the reaction of the investors against Athens, which has pushed the interest rates for new loans to unaffordable conditions, which means they simply must rely on existing revenues. So is Greek competitive in the world markets? Possibly, because it has been running a high import deficit, meaning it imports more than exports because of high wages. This issue is being addressed in the proposed solutions but it could still be holding the debt levels high. Have the Greeks been feathering their personal nests? It's not likely. They earn about 75% of the EuroStat average across all EU countries. Prior to the economic downturn, about 20% of the nation was in poverty and 25% live in apartments too small for the number of people who reside there. And what of the most often mentioned issue: extravagant pensions? Most people in Greece retire at about age 62 and live on just 55% of the EuroStat average of their public income (Kaufman, 2010:5-10).

Greece's budget deficit grew too far exceed the allowable 3% because of what it has done consistency and because of its inability to be honest about its potential. Part of the reason for that was poor planning; part of it was outright lies and deceptions. Because of the latter this country more than any others is being pushed to show that it can and will change. Whether its forced acceptance of a rapid reduction of debt can work and whether it will settle in to replace Greece's historical missteps is difficult to say. But now that it is part of the EU and the Euro Zone, what it does has major implications for other who are not living up to their expectations either.

REFERENCES

Capanoglu, S.G. (2010). The debt crisis in Greece and the Euro Zone. Economic Development Foundation. IKV.

Collignon, S. (2010). Private Union Bonds as an exit from the Greek drama. .

Europa (2010). Commission assesses Stability Programme of Greece; makes recommendations to correct the excessive budget deficit, improve competitiveness through structural reforms and provide reliable statistics. RAPID Press Release, Europa. .

Heritage Foundation. (2012). Greece. Economic Freedom Score. .

James, W. And Butters, J. (2005). Stability and Growth Pact. Civatas. .

Kaufman, S. (2010). Sell your islands you bankrupt Greeks: 20 popular fallacies during the debt crisis. Rosa Luxemberg Foundation. .

Matziorinis, K. Greek economy at a turning point: Recent performance, current challenge, and future prospects. No date. .

Oliver, S. (2010). The euro-zone debt debacle and the global recovery. Oliver's Insights. AMP Capital Investors. Edition 17. .

Petrakis, P.E. The Borrowing Requirements of the Greek Public Sector: 1844-1869. . [END OF PREVIEW] . . . READ MORE

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