In recent years, Greece has gone further and further down the tubes where the economy is concerned. After being forced to default on massive loans from European banks and the European Union’s ever-increasing pressure on Greece to bring the economy back up to levels high enough to pay back the loans, the country is simply unable to catch a break.
When Greece first started having big economic problems, it compensated by borrowing money. A lot of the money came from German banks and a few other banks from other countries. The idea was that Greece would be able to stimulate their economy by adding money to the economy to help citizens keep spending. However, the amount that they were able to borrow was not even enough to keep the economy afloat enough to correct itself. The Greek government had the right IDEA… It just didn’t end up working out like they thought it would. Through no real fault of their own they are now in massive debt to a good portion of the European Union.
Here’s the massive misconception about most economic crisis: Usually, no one is in the right and no one is in the wrong. The Greek government was made to spend FAR beyond its means. But it DOES take two to tango… No one forced the European banks to invest in Greece. All in all, it is a mess for everyone concerned. But the “fixing” of the problem is an even bigger mess, and has all the characteristics of a purposeful economic coup.
The idea of the European Union is for Greece to promote “austerity measures.” Austerity measures basically just means that Greece reduces spending down to ONLY what they need. No luxury items, nothing unnecessary. Austerity sounds like a good idea on the surface, until you remember something important: how is the economy supposed to run if no one is really spending anything?
The austerity measures have not really helped anything. To be honest, they PROBABLY would eventually fix the problem… But to naturally correct the economy, it would take about 10-15 YEARS of austerity measures, and that is a LOW estimate.
The European banks should NOT have made the loans to Greece. That was a terrible idea, and the resultant austerity measures to “fix” the problem will do nothing but damage the economy of the entire European Union. Right now, Greek citizens often live in fear that their homes will be repossessed by the banks in Europe… Which is not a good spot for massive economic growth.
So what IS the solution? In all honesty, investing and spending is the ONLY way that Greece’s economy will ever regain strength. The European Union will likely want a say in Greece’s government if they end up paying them huge amounts of bailout money. That will be fine (not fun or enjoyable, but necessary) for Greece’s economy to ever get back to health. If the European Union takes one for the team and pours a massive amount of money and the Greek government spends a bit less, the economy has a chance! This however is sure: Greece will NEVER get back to normal unless the European Union helps it.