We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Nobody downloaded yet

Financial Crisis in Greece (2010-2013) - Essay Example

Comments (0)
Summary
Name of of Professor Name of Course 16 December 2013 Financial Crisis in Greece (2010-2013) Background The Greek economy has been suffering due to a huge fiscal deficit and heavy government borrowing, in much greater proportion to the size of its economy…
Download full paper
GRAB THE BEST PAPER
Financial Crisis in Greece (2010-2013)
Read TextPreview

Extract of sample
Financial Crisis in Greece (2010-2013)

Download file to see previous pages... Public borrowing was undertaken heavily but grossly underreported leading to a debt-to-GDP ratio much above the 3% target. By 2009-2010 it became clear to investors that Greece would not be able to pay its creditors because of a huge fiscal deficit and government debt. The ongoing global financial crisis worsened the economic outlook for the country and it appeared that the country would default on its loan payments. Causes of the Greek Financial Crisis According to Dellas and Tavlas (2013), one of the main causes of the Greek debt crisis was the absence of an adjusting mechanism between money growth and credit growth. Historically, Greece has been running high public debts compared to its GDP which went largely ignored by foreign investors. As a result, there was little incentive for the country to reduce current and fiscal account deficits. Dellas and Tavlas (2013) explain that part of the reason was the fact that Greece did not use the gold standard and its currency was pegged to the Euro. There was an over-reliance by investing and financing countries on the willingness and enthusiasm by Eurozone core countries including Germany to bailout the Greek economy in case of a debt crisis. Throughout this period, the Greek economy continued to charge low interest rates in order to stimulate investment in the economy. As a result, the public borrowing continued to increase pacing the way for a sovereign debt crisis. In a paper presented at the Bank of Greece workshop, Manessiotis (2011) explains that poor fiscal discipline and lack of competitiveness in the economy were major factors that contributed to the crisis. These aspects of the economy should have received urgent priority following Greece’s entry into the Eurozone. Fiscal deficit ran up to 5.3% of GDP after 2006 whereas the target was 3.0%. Moreover, in 2008 the situation worsened with revenue falling by 1.3% compared to GDP while expenditures exceeded GDP by 1.2%. These problems were further exacerbated by the international financial crisis that began in 2008. Conditions Imposed by IMF on Greece In 2010, it became nearly certain that Greece could not meet its sovereign debt payments and would inevitably default. The implications for the entire Eurozone region would have been severe. Hence, in May 2010, the Eurozone in collaboration with the International Monetary Fund (IMF) prepared a bailout package worth €110 billion of which the IMF was to contribute €30 billion to enable Greece to improve its economy and avoid defaulting on its debts (Financial Post, 2013). This bailout package was subject to certain conditions. Mainly, the conditions required Greece to improve its fiscal performance and make the economy more competitive and open. The first condition imposed by the IMF required Greece to implement austerity measures in order to control the fiscal deficit. It was required that Greece reduce its public spending in order to narrow the fiscal deficit. Secondly, the fiscal debt problem was to be controlled by a policy of privatization of public assets. This measure would prevent the government from incurring additional debts to finance public organizations. By the end of 2015, the IMF required €50 billion worth of public assets to be privatized. Finally, the IMF required Greece to implement structural reforms in the economy to make it more business-friendly and competitive. This would stimulate business activity and help to strengthen the economy. However, the conditions have not been met satisfactorily ...Download file to see next pagesRead More
Comments (0)
Click to create a comment or rate a document
CHECK THESE SAMPLES - THEY ALSO FIT YOUR TOPIC
Greece Economic Crisis of 2011 and its Prospects in the EU as its Member
The Euro Zone is composed of a single monetary market and heterogeneous countries. The Greek crisis signaled a crisis of the entire Euro Zone. Chronological review of the crisis unfolding is demonstrated in the paper. Origins of the crisis lay in the Greek public debt. Politically, an exit by Greece at that time could imply a disaster for the EU.
10 Pages(2500 words)Essay
From financial crisis to global recovery
This paper will discuss the recent trend in global FDI flows, the FDI flows and balance of payment of the US economy and lastly the Spanish crisis of 2012. Introduction The global FDI flows were estimated at $ 1,114 trillion in 2009 and slightly climbed to about $ 1,122 trillion in 2010 (Breitfeld, 2010).
12 Pages(3000 words)Essay
Examine the new policies proposed to solve the financial and sovereign debt crisis in Europe. Your report should include a brief
In the second part, the essay will try to analyze the relationship between sovereign debt default and capital market modelling of banks with the help of research reports of Goldman Sachs Global Economics, Organisation for Economic Co-operation and Development or OECD.
4 Pages(1000 words)Essay
Should Greece leave the European Union, or the Eurozone
Should Greece leave the European Union, or the Eurozone? The concept of a unified Europe goes a long way in the 9th century when the Frankish emperor Charlemagne dominated over a major area of Europe. In the 19th century, the French leader Napolean Bonaparte tried to capture many regions of Europe.
10 Pages(2500 words)Essay
Factors contributing to Greece Financial crisis
This dissertation discovered substantial funds poured into Greece through the banks. But there has been no apparent transparency on the part of banks. Where the banks have been channelling the loans -- whether in the banks’ Investment Banking, or for private entrepreneurs—cannot be identified..
35 Pages(8750 words)Dissertation
EUROPEAN FINANCIAL CRISIS AND FINANCIAL MARKETS
In seeking an answer to this question, this paper borrows heavily from the elements of the portfolio theory and the asset pricing. Matousek (2012) observes that the portfolio theory is a theory of finance that aims at maximizing the expected return of a particular portfolio risk, or effectively minimizing the risks associated with a particular portfolio.
6 Pages(1500 words)Essay
Financial Crisis in Greece
In addition, are effects of exiting the eurozone on both monetary policy and fiscal policy. Finally is how this exit would affect options for financing debt. The problem in
2 Pages(500 words)Admission/Application Essay
The European sovereign debt crisis
e governments of the few countries, notably Greece, Ireland and Portugal to address the financial debt crisis dating back to the year 2000 eventually became the major cause of the European sovereign debt crisis (Beirne and Fratzscher, 77). However, the major question that
8 Pages(2000 words)Essay
Economy of Greece
For instance, in the year 2009, Greece faced massive financial crisis, and in subsequence, the soundness as well as the sustainability of its financial market underwent a critical situation. Owing to the financial
12 Pages(3000 words)Essay
Let us find you another Essay on topic Financial Crisis in Greece (2010-2013) for FREE!
Contact us:
+16312120006
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us