If you follow the news at all, you might have heard or seen something about Greece in between headlines about the Women’s World Cup or the newest GOP contender. If you do not follow the news, hopefully this blog post will catch you up. Greece is currently experiencing major economic turmoil. The Greek stock market and multiple banks have been closed for the past week, Greek citizens are limited to withdrawing about $60 dollars a day, and there was a nationwide vote to decide on the better of two evils. So what’s happening? In short, the Greek government borrowed way too much money from international organizations (namely those in Europe) to help relieve its debt. But it only worsened their situation in the long run due to the Greek government’s inability to repay its creditors. Greece missed a major repayment worth almost $2 billion dollars to the IMF a few weeks ago, which caught the global economy’s attention. (Side note, this is the first time a developed nation has every missed a payment to the IMF).
But here is where it gets even more serious. Greece owes the ECB (European Central Bank) almost $4 billion dollars by July 20th. Guess what? That’s not happening. So if Greece cannot make dues by July 20th (which they certainly cannot at the moment), the ECB is threating to cut Greece off from its emergency allowance. That means the Greek government would no longer be able to operate because they would be essentially broke, so they would be forced to print a new currency, technically their old currency. If they print a new currency, it would be terrible for their already disabled economy.
Now throw in the fact that Greek voters just shut down an emergency bailout, mainly because the conditions called for very deep spending cuts by the government. Also, the relatively new government in Greece is leftist controlled. Note that they certainly played a role in condemning the newest bailout plan, going as far as comparing it to blackmail. Now Greece must negotiate a new deal with creditors before July 20th, or face leaving the Eurozone and dropping the Euro. That, by the way, would be another first claimed by the struggling country.
nrr5134 says
Great post. I’m interested to see what will happen by July 20th. Hopefully there can be some resolution
Laura Yohe says
You did a great job explaining the issue that is going on in Greece. I really enjoyed that you gave different points of your argument and let people comprehend what is going on in the country.
Nicholas Ciatto says
Good job taking a complex issue and making it very easy to understand and explaining the current conditions the Greek citizens are living under.