May 29, 2017 | Barcelona, Spain
Before coming to study in Barcelona, I took an International Business course that covered introductory concepts regarding global trade and economics. A point of emphasis in that class was the European PIGS nations, specifically Greece for it’s immense financial issues in the past decade. In 2008, Greece became the center of Europe’s debt crisis after Wall Street crashed in 2008. Shortly after the crash, Greece announced in late 2009 that it had been understating its deficit status for years and had been accumulating immense debt without a plan to pay it off. A year later in 2010, Greece was unavoidably headed towards bankruptcy. In an attempt to save Greece, the IMF and European Central Bank tried on two separate occasions to provide international bail outs for Greece, together totaling over 240 billion euros. However, these bailouts failed, much due to the unachievable conditions set by the lenders, including harsh austerity terms, unrealistic budget cuts, and very high tax increases.
Despite the 240 billion in bailout funds, Greece’s economic status has shown little improvement. The economy of the nation has shrunk by a quarter in the previous five years and unemployment is at an all time high of 25 percent. Instead of stimulating the economy, the bail out funds have gone strictly towards paying off Greece’s international loans while the government still has staggering debt that it can’t begin to pay off until a recovery of the economy begins. This inability to pay off debts or show any signs of progress have made relations with the rest of the EU tense.
On a much larger scale, Greece’s problems do not seem to be out of the ordinary for many Western countries. Like the crash of Wall Street in the US as previously mentioned, as well as the failure of other EU economics such as Portugal and Ireland, there seems to be a general lack of transparency among financial institutions as well as governments around the world. There is a pattern of things getting out of hand while those who should be managing and regulating the economy turn a blind eye to obvious issues such as insurmountable debt and false financial reporting. At a certain point there must have been a number of Greek government and financial officials who knew the true immensity of their acquired debt in the past couple decades that lead them to this point. Instead of doing their job and duty of accurately reporting this, they took the seemingly easier path of ignoring it till it could not longer be ignored.
Now, Greece faces a large number of consequences, even potentially having to leave the Eurozone that is already showing signs of faltering with other nations looking to follow the UK and Brexit.