Contact Us
Sign In / Sign Up for FREE
Go to advanced search...

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

Comments (0) Cite this document
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 File format: .doc, available for editing
GRAB THE BEST PAPER98.4% of users find it useful
Financial Crisis in Greece (2010-2013)
Read Text Preview

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 pages Read More
Cite this document
  • APA
  • MLA
(“Financial Crisis in Greece (2010-2013) Essay Example | Topics and Well Written Essays - 1750 words”, n.d.)
Financial Crisis in Greece (2010-2013) Essay Example | Topics and Well Written Essays - 1750 words. Retrieved from
(Financial Crisis in Greece (2010-2013) Essay Example | Topics and Well Written Essays - 1750 Words)
Financial Crisis in Greece (2010-2013) Essay Example | Topics and Well Written Essays - 1750 Words.
“Financial Crisis in Greece (2010-2013) Essay Example | Topics and Well Written Essays - 1750 Words”, n.d.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Financial Crisis in Greece (2010-2013)

Financial Upheavals. Financial crisis

... Financial Upheavals Financial crises are inevitable and seem to be a usual and reasonablyinvariant characteristic of such business cycle. The economic system of any country is subject to discrete business cycles that lie on the boom-depression continuum. The aftermaths of any such business cycle may vary from being modest to remorseless hinging upon its magnitude and continuance. History show that the American economy has moved through periods of boom, recession and recovery. The years 1837, 1893 and 1929 help retrace the occurrence of three major depressions in United States (Calomiris 2010). The downturns of 1857, 1873, and 1907 are also referred in the history books (Rothbard 2002). The America of 1819 and the financial crisis its...
10 Pages (2500 words) Essay

Financial Crisis

... Organization. Injection of liquidity into the financial institutions was thought to serve the purpose of revival in order to combat the situation of fall in confidence. The time called for unlimited as well as increased level of deposit insurance. The Central Bank was responsible for the reductions in the interest rates and purchased commercial paper along with money market instruments (Shah, 2010). The government increased the spending and began to provide the provisions of tax cuts. The International monetary Fund also came into the picture by providing aid to the developing countries. The strategists hold the Wall Street to be responsible for the initial stages of the crisis as the large investment banks are located there. The crisis...
15 Pages (3750 words) Essay

Factors contributing to Greece Financial crisis

... this could be realized did not have a corresponding set of concrete action plans. EU members simply decided on a debt limit of up to 190% GDP by 2013 and attainment of 120% GDP by 2020 for Greece. As of December 2012, the EU agreed to bailout Greece with $ 57 billion meant to partly pay debts and partly support Greek banks. BBC (2012b) There was an agreement for the ECB, IMF, and European Commission to supply Greece with 240 billion Euros out of which 150 billion had already been extended. Muir, Blackburn, and the Associated Press (2010) reported at a time when the global economic crisis had its greatest impact on Greece, and Greeks demonstrated against “tax hikes and drastic spending cuts”. Among the reasons for Greece financial crisis...
35 Pages (8750 words) Dissertation

Current International Debt Crisis (Greece Crisis)

The countries had fallen into a debt trap and there was problem of cash crunch and liquidity crisis in the banking sector. Thus the Euro zone faced both fiscal and monetary policy problems along with a slowdown of the economies. The main reason behind this is the common monetary policy that these countries have owning to the adoption of the Euro currency across the entire zone but different fiscal policies for each of the countries. The countries of this zone had decided to limit their borrowings to a certain designated level but they could not restrict the borrowings to that level (Feldstein, 1997, p.31). Thus there was a problem of convergence for all the countries that came under this zone. Spain Economy before and after the C...
4 Pages (1000 words) Essay

Effects of the Financial Crisis on Greece

... within their government spending (OECD Publishing, 2010:51). With increased deficits on Greece’s government spending, the country started experiencing increased debt levels. With this respect, it is agreeable that the recent financial crisis of 2008 and subsequent recession affected Greece by skyrocketing its government spending. This in turn increased Greece’s interest rates on the government debt (Kolb, 2011:60). Due to increased government spending and increased interests on government bonds, the country of Greece faced subsequent shifts in her socioeconomic situation. For one, both Greece could not face recession nor withstand the ongoing financial crisis (Kolb, 2011:81). As such, she needed a “massive bailout” which would only...
7 Pages (1750 words) Coursework

Financial Crisis in Greece

...Effects of Financial Crisis Introduction Financial crisis is a term for use where several monetary assets rapidly lose a great part of their nominal worth. This occurs due to poor monitoring of currency. Mismanagement of the executive financial institutions is also a grand contributor of financial crises. The essay is about the problem in Greece and its origin, and the benefits Greece derives from being part of euro zone. 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. Nature and origin of the problem in Greece The problem in Greece is unsustainable budget deficits and a recession. This is due to pervasive economic reforms...
2 Pages (500 words) Admission/Application Essay

Bulgaria and Greece Economy Crisis

In contrast, Greek had loose regulatory measures for controlling its financial markets, which resulted in the country falling into heavy debt trap during the Euro crisis. The repeated bailout packages offered by other EU countries like Germany and France brought spiral impact on Greece with additional borrowings and almost nil repayments.
Bulgaria has borders with Serbia, Romania, Turkey, Greece, and Macedonia as it is located in the Southeastern part of Europe. While the Bulgarian economy is mostly based on industrial activity, the service sector also contributes to the country’s economic development. Bulgaria is involved in the industrial production of various goods that include iron, electronics, copper, automobile co...
8 Pages (2000 words) Term Paper

Financial crisis

... Teacher Shadow banking in China Shadow banking in China is a financial system whereby non-bank financial intermediaries provide traditional financial services and banking functions to traditional commercial banks. In simpler terms, it meant that intermediaries called trust companies which are not allowed traditional banking functions such as receiving deposits and loan out money, can manage the money from commercial banks. The common transaction involving shadow banking are WMP or wealth management products which are really just savings deposits with higher annual return of a guaranteed 3%. Compared to the traditional savings deposit, this 3% is way higher which explains why a lot of depositors and investors put their money in WMPs...
2 Pages (500 words) Essay

Service Management in Financial Services

 Measurement of quality is the result of the services provided to the customer with a prompt response based on the requirements and expectations. Quality of various processes must be managed so as to provide the customer with consistent, accurate and timely results. These results must be of high quality because various other factors pertaining to a business deal are dependent on them. Quality assures the customer of an appropriate service that includes an error-free transaction, access to accurate data pertaining to the specific schemes and services, transfer of credits, changes concerned with the membership and account details and an undoubted trust that helps in attaining the services time and again.

Financial se...
11 Pages (2750 words) Case Study

Unmarried Parents: Financial Provisions

There was no evidence before the court to suggest otherwise. I would, therefore, suggest that the child be examined by an expert in child welfare to first determine whether or not the mother is ultimately right in her assessment that the disparity in the value of her parent’s home causes her some concern. It is also important to determine via a welfare expert whether or not relocating to one of the properties suggested by the father would adversely impact upon the child’s wellbeing. If an expert agrees that relocating and the disparity in the value of the parents’ homes are not matters of concern for the child then an appeal would be likely to succeed. I would go further to predict that the father’s origina...
6 Pages (1500 words) Case Study

Accounting & Financial Management

AWB’s operations can be categorized into areas ranging from ‘pool management services’ to ‘harvest financing’, and ‘International commodity management’. Only a company with such a big range of activities and financial outlays can become the benchmark for an equally big company like ‘Woolworth Limited’.

The performance of an entity can be better analyzed through its profitability analyses. The profitability ratios like Gross Profit ratio, Net Profit Margins, Return on assets (ROA), and Return on Equity (ROE). The calculations of such ratios are shown in the attached annexure. The Gross Profit ratio measures the percentage of each pound or dollar of sales remaining aft...
10 Pages (2500 words) Assignment

Financial Management Analysis of Rio Tinto Plc

Taking into consideration that Harmony is the sixth-largest in the world in the gold mining industry, the choice of Harmony God Mining Co. as a benchmark company is the most suitable and justifiable. Moreover, Harmony has also some investment stake in Rio Tinto, and this situation makes the company more suitable for the choice. At places, the benchmark company’s performances have been better than Rio Tinto, and thus Harmony has a competitive edge as well over Rio Tinto.

Profitability ratios like Operating Margin Ratio, Net Margin Ratio, Return on Assets (ROA), and Return on Equity (ROE) are the performance analyzer of any company. Profit Margin ratios show the relationship between profit and sales. Since profit ca...
8 Pages (2000 words) Case Study

Emergency Economic Stabilization Act of 2008 and How It Has Impacted the Financial Markets

Though there were objections from various quarters about the huge amounts of tax payer’s money being used in the bailout of huge corporates, the Act has been successful in moving the downturn towards a flat point and now has started slowly moving towards a recovery stage. The various programs under the EESA 2008 have played a significant role in the financial sector, housing mortgage, and banking institutions to save the institutions from complete disaster.

The Emergency Economic Stabilization Act is a huge taxpayer bailout designed to rescue the financial sector. The amount of money to be used is around $700 billion or $2000 per American citizen (Public mark up). Emergency Economic Stabilization Act of 2008 is al...
10 Pages (2500 words) Research Paper

The Effects of Financial Crisis on Supplier Selection Criteria of the Oil and Gas Industry Equipment Market

It is a difficult task to find those vendors who not only have the adequate quality and quantity of the needed raw materials but who also have an attitude of efficiency and display commitment to customer service (Sonmat, 2006). Further, organizations also strive to locate and select vendors who can be depended upon for long term relationship.

The number of factors or attributes desired from the vendor is vast, and different organizations and different industries place different importance on the attributes (Sonmat, 2006). Some of the vendor attributes may gain importance owing to the nature of the industry, for example, in the case of consumer perishables suppliers, like fresh vegetables or fruits, the buying firm would...
20 Pages (5000 words) Literature review

Bernard Madoff : A Scapegoat of the Economic Crisis

Darwin was condemned and treated with contempt by the Church for proposing the theory of evolution that linked all living matter in the earth, including humans. In the case of Bertrand Russell, he was imprisoned as a conscientious objector, for expressing his opposition to British participation in the First World War. These are typical examples of people being wrongfully punished when they were guilty of no crime or fraud or misdoing. It would be highly improper to associate Bernard Madoff with the aforementioned luminaries, for he was truly guilty of carrying out the biggest financial fraud in modern history. At the same time, it would be simplistic to classify him as a victim of the contemporary judicial system. The truth, in fa...
6 Pages (1500 words) Assignment

International Business: World Economic Forum and Davos 2010

...Introduction Globalization, one of the most hotly debated issues means global capitalism to some while others consider it to be the continuation of modernism with the forces of wealth, progress, democracy and happiness at play (Kellner, 2002). Globalization is considered to be beneficial which promotes economic prosperity, cultural diversity and technological advancement. According to the critical social theory, technology and capital work together to create a new globalized and interconnected world. While each force of globalization is important, technological revolution has impacted the business models, value creation and differentiation (Spelman, 2010). The cloud computing technologies that have made the popular social networking...
7 Pages (1750 words) Coursework

Globalization and World Economic Forum at Davos 2010

The seven forces of globalization are; Markets, Production, Culture, Labor, Technology, Environment, and Liberalization. Of these factors, the globalization of markets has engaged substantial attention of the firms and academia. Some markets are highly globalized, while some are not. The scale of market globalization is determined by the extent of globalization of customers, customer needs, distribution channels and marketing strategies of the players in the industry (Stonehouse et al, 2004).

The phenomenon of globalization of markets has resulted in both advantages and disadvantages. It has resulted in the convergence in the requirement of features in a product and augmentation of the intensity of B2B and B2C communica...
7 Pages (1750 words) Coursework

Asian Financial Crisis Versus Global Financial Crisis

... Lehman Brothers filed for bankruptcy and other banks had to be bailed out under the Emergency Economic Stabilization Act of 2008, otherwise known as the bailout of the US financial system. This act gave sweeping powers to the Fed and the Treasury secretary to help troubled banks and financial institutions with up to $700 Billion of liquidity made available to them. The origins of this crisis began in the housing market when the sub-prime borrowers or the borrowers with poor credit history were given access to cheap credit and mortgages to finance their home purchases. (Stiglitz, 2010) As the value of the homes depreciated and the housing market began to bottom out, banks were left with billions of dollars worth of mortgages that were...
9 Pages (2250 words) Term Paper

Financial Crisis in the U.S. 2008-2010

... The Financial Crisis 2008-2010 Reasons, Impacts & Counter Measures The Global Financial Crisis Introduction The global financial crisis which started in early 2007 has proven to be perhaps the great financial catastrophe in history. Although it traces its roots back to the starting of the millennia, the subsequent meltdown was most gruesome over the past 3 years. What began as a crisis of the sub-prime mortgage market in the United States quickly transcended national borders and developed into a upheaval of epic proportions. What ensued was a systematic debacle of stock exchanges, investment banking, derivatives etc. all financial markets ranging from equity, currency, real estate, futures etc. In order to fully understand...
7 Pages (1750 words) Research Paper

Management of Financial Institutions

The first paper is about International Banking Regulation. For banks that may want to spread across borders, the study gives an explanation of how the various policies and laws may affect its operations. The second paper in the study gives the various restrictions on the development of Pan-European bank mergers. It shows how regional liquidity shocks limit cross-border bank mergers. Thirdly, the study shows the various methods banks use in risk assessment when lending to less developed countries’ sovereign governments. It gives a topology that can help banks efficiently assess risks. An explanation of the multi-nationalization that is given in this paper comes with a model showing how applicable the profit maximization hypot...
8 Pages (2000 words) Literature review
sponsored ads
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.

Let us find you another Essay on topic Financial Crisis in Greece (2010-2013) for FREE!

Contact Us