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Greece: Economic Crisis

Greece: Economic Crisis

The European sovereign debt crisis is an ongoing financial crisis that has made it difficult or impossible for some countries in the euro area to re-finance their government debt without the assistance of third parties.

 

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Margaret Neterval

Margaret Neterval

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Mr. Mavridis is a co-founder of a growing network here in Volos that uses a so-called Local Alternative Unit, or TEM in Greek, to exchange goods and services — language classes, baby-sitting, computer support, home-cooked meals — and to receive discounts at some local businesses. Part alternative currency, part barter system, part open-air market, the Volos network has grown exponentially in the past year, from 50 to 400 members. It is one of several such groups cropping up around the country, as Greeks squeezed by large wage cuts, tax increases and growing fears about whether they will continue to use the euro have looked for creative ways to cope with a radically changing economic landscape.

Article: In Greece, Barter Network...
Source: The New York Times

Heavily involved behind the scenes are countries such as Germany, which is paying the bulk of Greece’s rescue loans, and the IMF, which is also involved in the bailouts. In addition, there are the individual bond holders such as hedge funds which have bought Greek bonds but also hold default insurance, Katseli said.

Article: Greece sees debt relief d...
Source: The Washington Post

Greece's crisis has caused more poverty than its welfare system is equipped to deal with, so charities fill the gap.
However, donations are down and charities now have to pay taxes they were once exempt from.
"Charity associations like ours are doing 50% of the work that the Greek state should be doing and instead of thanking us they are penalising us," says director of SOS Children's Villages, George Protopapas.

Article: The Greek parents too poo...
Source: British Broadcasting Corp...

Near-bankrupt Greece has been surviving on a €110 billion ($142.02 billion) rescue loan program from European countries and the IMF since May 2010, but requires additional help to meet its funding needs.

Article: Greece sees debt relief d...
Source: The Washington Post

Several countries in the Eurozone have borrowed and spent too much since the global recession, losing control of their finances. Greece was the first to take a multi-billion pound bailout from other European countries last May, followed by Portugal and Ireland. Their governments had to agree to spending cuts before the loans were approved. Greece is still in trouble though and needs more money.

Article: Greece in crisis: How Eur...
Source: BBC

And the heightened speculation that Greece might have to return to the drachma has sped up the flood of money leaving Greek banks: money to be deposited abroad, stashed at home or in one’s car, and most certainly not spent. Since January 2010, Greek banks have lost $63.5 billion in deposits — or about 20 percent of annual economic output. But bankers here say that in September and October the numbers rose substantially, with estimates ranging from $13.8 billion to $20.7 billion for just these two months.

Article: In Greece, Economic Crisi...
Source: The New York Times

The rising numbers of shops and businesses firing staff or shutting down makes it harder for the government to collect taxes and plug the budget gap, raising the risk that even further belt-tightening may be necessary. Unemployment will slowly start decreasing from 2014 but will still stand at just over 13 percent in 2020, the IMF said in a report published on Tuesday, raising the prospect of many more years of pain.

Article: Greek unemployment at rec...
Source: Reuters

Construction companies, manufacturers, retailers and wholesalers have been particularly hard hit, shedding nearly 180,000 jobs in the last year alone as tax hikes and spending cuts have weighed on an economy facing a fifth year of recession in 2012. Unemployment jumped to 17.7 percent in the third quarter from 16.3 percent in the previous three-month period, the Greek statistics service said -- the highest quarterly unemployment rate recorded since the series started in 1998.

Article: Greek unemployment at rec...
Source: Reuters

However, whilst money has flowed out of the government's coffers, its income has been hit by widespread tax evasion.

When the global financial downturn hit, Greece was ill-prepared to cope.

It was given 110bn euros of bailout loans in May 2010 to help it get through the crisis - and then in July 2011, it was earmarked to receive another 109bn euros.

Article: Q&;A: Greek debt crisis
Source: British Broadcasting Corp...

Public spending soared and public sector wages practically doubled in the past decade. It has more than 340bn euros of debt - for a country of 11 million people, about 31,000 euros per person.

Article: Q&A: Greek debt crisis
Source: British Broadcasting Corp...
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