When essay writing on the Greek economy, you will have to conduct solid research on the Greece debt crisis. As long as Greece is a part of the Euro Zone, the financial crises there might influence the European Central Bank. It is possible to say that the uncomfortable economic condition in Greece’s economy led to the global financial crisis on financial markets.
The current crisis surrounding the economy of Greece has been the initial ordeal that has been felt in the Eurozone area market. It is important to pay attention to impacts, causes, and solutions that were made by the Greek government to mitigate the situation’s adversity. Nevertheless, as long as both political and economic events are still recounting, even though it might be imperfect, they are crucial in solutions determining the predicaments.
The essay on Greece’s financial crisis outlines the current prices’ behavior upheavals and also the Greek debt burden and public debt yield. It gives valuable data that will enable the European Union and the Greek government to articulate in the attempt to realize the informed decision.
The recent situation in Greece
The Greek economic crisis occurred in 2008 August when the b.p. (basic points) of government boosted from 25 b.p. to 65 b.p. The increase was 160%. So the government has been bound to cope with the severe economic crises. Then there was the increment phase (from September 2008 to March 2009) that denoted the government’s credit crunch crisis peak. Till the end of March 2009, the Greek government bond yield spread was 285 b.p.
Till April there was de-escalation that coincided with the global economic crisis ease. Most of the markets kept on having Greek bonds on their bad books. However, the government bond yield of Greece eliminated to 121 b.p. and the Greek bonds perception remained the same.
Greek financial crisis essay and solutions task
Till mid-2010, the spread of government bond yields increased. It was between 120-130b.p. Nevertheless, the government encountered different events in this period of time. First of all, there was a snap election that generated the change in the government. Secondly, the cutting edge government announced the increment in the budget of the government from 6% to 12.7%.
It made sure that the government has been able to allocate the finances to the stock market. So the value of the government bond boosted. Finally, there has been a submission to the European Commission of the recently proposed budgetary revenues and expenditure for 2010 with the new Greece government.
Nevertheless, following such decisive events, the economy faced rapid acceleration of government bond yield spread. This trend was vivid not only in Greece but also in Spain and Portugal.
The negotiations that were held between the Greek government and the EMU member-states concerning the debt crisis demonstrated that there has been a split in the economic endeavors. The vast majority of the countries opposed the bail-out forwarded by the government of Greece while the others tended to back up Greece’s prospect.
Then the European Union agreed to apprehend the plan of the government towards rescuing the crisis of the Greek government debt. It involved the issuing bilateral loans strategy from the European Union countries to Greece.
To add more, the European Union countries also compiled with the elimination of the loan rate to make the mortgage be affordable to the Greeks. According to the plan, the sum was close to 45 billion Euros. Attempting to mitigate the adversity of the situation, the IMF/EU approach was activated to rescue the crisis.
Causes of the debt crisis
Thus, what were the reasons for the Greek debt crisis? The initial cause of the debt crisis includes Greek currency deterioration. In the initial generation crisis that was suggested by Paul Krugman the speculative development that was trailed by the government and funded excessively in the attempt to deplete the foreign currency reserves.
As soon as the reserves reduced below the threshold, the government purchased the remaining foreign currency reserves, trying to force the currency devaluation. It makes sure that the rate of exchange is restored to the consistent value via the PPP (Purchasing Power Parity).
Perfectly, the unsustainable fiscal policy defines the debt and economic situation of Greece. Since the succession of EMU in 2001, Greece has faced consistent high inflation if compared to the EMU average. It resulted in crucial divergence from PPP, deficits, and prominent competitiveness adversity that were recorded currently.
Though the Greek fundamentals deterioration plays a significant role in recent events, the crisis escalation in 2009 was not caused by market changes fear that might be attributed to the default of the debt by the government of Greece.
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