Understanding Greek Financial Crisis or understanding Greek debt crisis. Lately stock market make a very volatile movement. When the price is in the beginning uptrend, suddenly blowed down by big negative sentiment from eurozone news. Why eurozone news is never stop blowing its negative sentiment? One of the problem is Greek crisis.
Greece is a developed European country and one of the member of the European Union, since 1981. When Greece united the Eurozone, the common perceptive was that all the member must maintain their budget deficit below 3% of GDP. afterward, it was found that Greece had a budget deficit of more than 13%. This, extremely high budget deficit, consecutively, highlighted the fiscal problems in Greece.
This Greece budget deficit happens because of at least three things, high spending of large projects, high salaries to civil servants, and low collection of taxes.
These fiscal problems, combined with high budget deficit, let to the concerns that if the things were allowed to continue in the same way, without any intervention from external forces (like European union or IMF), the Greece economy is surely heading for default. - Understanding Greek Financial Crisis -
The initial response of the Greece government to this crisis was that it is their internal problem and that they will resolve it themselves. However, the market reacted adversely by heavy selling of Greece bonds.
Subsequently, as the Greece fiscal problems continued to be getting worse, Greek authorities promised that they would work with the European Union to solve the problem They will reduce expenses, cut public sector salaries, raise taxes, and control corruption. However, this led to protests from the public, especially the trade unions.
Now a 110 billion euros bailout package has been planned by the IMF and European Union, to restore the nations finances. And referendum plan has been cancelled, also Prime minister George Papandreau has been replaced.
We are now waiting if all of the actions and changes are working well in Greece. That's for understanding greek financial crisis , necct article will be about Financial crisis in Italy
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