The Economic Crisis in Greece (Research Paper Sample)

Economics
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The Economic Crisis in Greece
The economic crisis in Greece is one of the very disturbing economic situations the world has ever faced. Much analysis has been taken aimed at the economic situation in Greece. To most analysts, the situation in Greece goes way beyond economics. There exist several questions concerning the crisis in Greece that by looking at the economic aspect of it may not lead the nation to an amicable solution. The contents of this paper are anchored around a New York Times article, which looks at the situation in Greece. In this article, titled “Greece's Economic and Political Traps” written by Nikos Konstandaras and published on 26th October, 2014, many issues that complicates the Greek economic situation are discussed. Here, the author contemplates the reasons why it has taken too long to solve an economic situation that originally looked very simple. In the article, the writer asks if the bailouts offered by the European commission, the International Monetary Fund and the European Union were of any help to the development of Greece and the pullout of Greece from such a long economic crisis (New York Times, 2014). The article has as well included the report from the Julius Baer Group’s September 2014 report which indicated the rise in Greece risk for poverty. The report indicates that severe deprivation in Greece from 27.6 percent in the year 2009 to 35.7 percent in the year 2014. These figures indicate a rise even after the bail out. What these figures further mean is that the crisis in Greece needed solutions not only through one point of view, but through critical analysis and evaluation of the situation (New York Times, 2014).
On top of the gradual rise in the poverty levels, Greeks are as well faced with a debt crisis. A lot of non-performing loans keeps getting injected into the economy of Greece. This means the economy of Greece is having a massive pull down. More than one hundred percent of the GDP is consumed in debts. Basically, the social lives of most Greeks are predicted to go down. The middle class always stand at the center of growth in any economy. In fact, to boost their economies, most nations empower the middle class to produce more as the also empower the lower class dwellers to attain the middle class economic status. The situation in Greece is however different. Since the origin of the crisis, the middle class has been subjected to more taxation. In any case, the Greek government is imposing more poverty on its people (New York Times, 2014). These drastic changes in the economy have not left the political situation untouched. It is believed that parties on the extreme left and right fought hard for the bailout. The main reasons behind their fights were the gains that they would eventually get. Massive bailouts results negatively on government image. The opposition parties take this opportunity to topple the government Petrakis (2011). Some political parties such as the New Democracy, Pasok are trying to counter the instability, but they have been overwhelmed. The opposition parties give little hearing to the suffering of the citizens but more to their political ambitions. Social platforms such as domestic tourism have also faced a blow a great deal. There are many lessons that an economic student can learn about the economic situation in Greece. First is the genesis of the problem. The Greek economists seemed to have forgotten the economic trends of boom and recession. It is from this mess that Greece could not rise from recession. As a student who eyes a participation in the macro- economic trends, the lessons that I have leant in class especially in analysis of the economic trends seems to be very suitable when applied during the formulation and implementation of economic policies. Most economies, Greece aside, find themselves in economic situations due to ignorance to the economic trends. From economic lessons, we have been told severally that not all problems that arise from economic defaults need solutions emanating from the economic perspective. The crisis in Greece is an evident that an economic situation may sometime need other perspectives to solve (Petrakis, 2011).
References
Lynn, M. (2010). Bust: Greece, the Euro and the sovereign debt crisis. Chichester: Wiley.
New York Times. (2014). Greece's Economic and Political Traps. Retrieved:  HYPERLINK "/2014/10/27/opinion/greeces-economic-and-political-traps.html?_r=0" /2014/10/27/opinion/greeces-economic-and-political-traps.html?_r=0.
Petrakis, P. (2011). The Greek Economy after the Crisis. (The Greek Economy and the Crisis) Berlin: Springer Berlin.
Article Used
Link:  HYPERLINK "/2014/10/27/opinion/greeces-economic-and-political-traps.html?_r=1" /2014/10/27/opinion/greeces-economic-and-political-traps.html?_r=1
Greece's Economic and Political Traps
ATHENS — Five years into the Greek crisis, it is becoming increasingly difficult to hope that it will end anytime soon. Perhaps we expected too much: that the largest international bailout in history would help set the economy back on its feet within a couple of years; that we could put the problems that had brought us to the brink of bankruptcy behind us; that our political system would change, with new forces sweeping away incompetence and corruption.
But it would take a revolution to overturn frameworks, mentalities and behaviors developed over decades. What we have had, instead, is a relentless devaluation at every level: Greek society has lost a great deal, and gained little in return. We are caught in two traps — economic and political — that combine to make escape seem impossible.
For the past few years, Greece has been in the hole of austerity and recession. Our gross domestic product contracted by over a quarter between 2008 and 2013, with household wealth dropping by 23 percent since 2007, according to a September report produced by the Julius Baer Group. The percentage of Greeks at risk of poverty or severe deprivation has climbed to 35.7 percent, from 27.6 percent in 2009.
Consequently, more and more people are falling deep into debt, with over a billion euros in nonperforming loans being added each month to the bill (of at least 75 billion euros, or over 34 percent of all loans in August). Tax debts were at €70.16 billion in September. Just as the economy’s contraction has made public debt an unbearable 174.9 percent of G.D.P., the lack of credit and ever higher taxes have ravaged businesses, pushing unemployment up and keeping it high. (After six years of recession, the economy is expected to grow slightly this year.)
The middle class has been devastated; it has borne the brunt of higher taxes but will not be able to do so for much longer. Apart from a small primary surplus (when loans and interest are not counted) and a surge in tourism, investments and production remain low. Greece managed to remain in the eurozone, but the longer austerity continues, the deeper the hole we’re in.
The political trap is even more dangerous. The €240-billion- bailout agreement with our creditors (the troika of the European Commission, the European Central Bank and the International Monetary Fund) did not consider the political and social implications of forcing major change on people while putting them under severe economic pressure. Most citizens tried to keep up but were overwhelmed, and opposition parties, particularly marginal ones on the extreme left and right, benefited from this discontent. Meanwhile, the parties in government were unable to revoke their past behavior and push through all the necessary reforms.
Center-right New Democracy and center-left Pasok, in a coalition since elections in June 2012, have alternated in power for 40 years, and have shouldered the blame for past policies and also for the current, troika-mandated ones. With 155 seats in...