Greece: An Economy in Crisis Essay -- Economics

In this paper I will be discussing some causes of the problems with Greece’s economy that has lead it to where it is today. I will also be discussing some austerities being put in place to try to resolve these issues and why they are necessary to help Greece become prosperous again. Greece is currently at a cross roads, their economic practices over the last quarter of a century have brought the country on the brink of being bankrupt. There are many who feel their economy can be turned around by putting various austerities and reforms in to place. The problem has been coming to a general agreement on which path to follow and why. Some are against the austerities that Greece has agreed upon, they feel they are misguided and that they come at a cost of loss of sovereignty. Some feel that this is the price that has to be paid in order to avoid going bankrupt, so they support the austerities. Then, as in all things, you have a large portion of the public who are in the middle. They are unsure if any of these paths will lead them out of crisis. There has been a lot of talk and questions focused around the short-run solutions to the crisis faced by Greece. Can Greece possible repay their massive debt? Will they have to go through a restructure of the bonds it issued to the private sector? Should Greece exit the euro zone and go back to the drachma? Will the European Central Bank and the European Union offer any more financial help to Greece in the form of bailouts? Are any of these questions even worth consideration if Greece does not implement the proposed solutions to help turn their economy around? Before going further I feel it’s important to understand the difference between debt and deficit. A deficit is when the amounts of m... ...overnment debt can be repaid. Unless Greece reforms its policies quickly, they run the risk of losing their educated, creative and their skilled workers as they migrate to other countries looking for better opportunities. If economics has taught me anything, it is that people respond to incentives. Works Cited http://www.voxeu.org/index.php?q=node/5008 http://eprints.lse.ac.uk/26074/1/GreeSE_No_31.pdf http://www.asecu.gr/Seeje/issue06/katsios.pdf http://www.oecd.org/home/0,2987,en_2649_201185_1_1_1_1_1,00.html http://www.oecd.org/dataoecd/5/61/43284926.pdf http://greece.greekreporter.com/2012/05/02/greek-economy-still-floundering-but-out-of-default/ http://www.bloomberg.com/news/2012-05-02/greeks-reveal-euro-or-no-in-first-election-since-economy-shrank.html http://www.guardian.co.uk/business/2012/may/02/eurozone-crisis-canada-europe-greek-elections