The Greek Debt Crisis

The Greek Debt Crisis Fear has gripped the European Union and beyond because of the assertion that Greece may default on a huge pile of debt. An investigation of this dilemma reveals that the Greek culture has contributed immensely to the country’s financial woes. As a result of strong ethnic and family ties that bind the Greek, most organizations and financial institutions of this country are family-owned. Additionally, the Greek government has been seen as being overprotective and interventionist for its citizens (World Business Culture par. 2). This was seen in Papandreou’s first government, which ditched all fiscal discipline and introduced weird initiatives to please the citizens. For instance, this government introduced appalling pay hike and an unprecedented increase in employment of its citizen in the public sector (Pappas par. 6). Moreover, the pay hikes were supplemented by huge pensions, universal healthcare and other fringe benefits. Despite the fact that these initiatives were meant for the well being of the people, they hurt the economy of this nation. As a result, the government had to borrow money so that it could meet the need of its bloated and expensive workforce. Note that any attempts that were made to stop this extravagance had no lasting effect or were negated due to public pressure. Takis Pappas’ article “The causes of Greek crisis are in Greek Politics” together with an article by the World Business Culture entitled “Background to business in Greece” not only supported but also added some vital information on my school of thoughts about this subject. The current crisis in Greece will definitely impact its neighbors. At the moment, the global financial market has been gripped by panic over the impact of Greece’s situation on its neighbors, the European Union and particularly the PIIGS (Portugal, Italy, Ireland, Greece and Spain). It is believed that if the current situation persists, a major fiscal crisis emanate in the other countries. It is imperative to understand that Italy and Spain might be the worst causalities considering that they are the third and fourth largest economies in the Euro area. Despite the fact that most of Greece’s neighbors are experience a similar problem, none shares them to the same degree as Greece.

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