greek+debt+crisis

**By: Kyle **
 * GREEK DEBT CRISIS **

The Greek public debt crisis happened because of bad budget decisions and too much public spending by officials and agencies in the Greek government. Greece had its debt crisis occur after the government revised its deficit (when spending exceeds total income) prediction of 3.7% in early 2009 and 6% in September 2009, to 12.7% of Gross domestic product (GDP). Some estimates predict the Greek debt will reach 150 percent of GDP in the near future.  Within the next 5 years Greece has a 98% chance of defaulting on its debt (can’t pay its bills any longer). The former Greece Prime Minister, George Papandreou, had continually let down his people by proposing several unsuccessful debt plans, and thus steadily lost support as Prime Minister. The current Prime Minister, Lucas Papademos, inherited the debt crisis and has had to try and gain control of the current situation by making many unfavorable spending cuts. This has made him very unpopular with Greek citizens. In a recent poll 77% of legal voters said they have lost all hope that their leader can handle this crisis.  The Greek economy has 3 main issues:
 * 1) Ever since Greece adopted the Euro in 2002, (European currency which replaced the former currency or ECU on Jan. 1, 1999.) the Greek government has ignored the problems arising out of too much debt and went on an inexcusable spending spree resulting in €300 billion ($413.6 billion) in debt, which is much larger then all of the Greek economy.
 * 2) When the global economic downturn occurred, the Greek economy was severely weakened. This happened because of decades of unrestrained spending, cheap lending and the failure to carry out financial reforms by the Greek government.
 * 3) Many strikes and opposition to new taxes on fuel, tobacco, and alcohol have led to schools, courthouses, businesses, highways, and even airports being shut down which reduces the amount of business taxes and in turn creates more government debt.

In the year 2000 Greece ran a large deficit. As a result of a weak global economy in the new millennia, their 2 best industries, shipping and tourism, plummeted and the debt arising from the deficit grew and grew until 2010 when it was too great for the country to handle. At that time, the 17 Euro Zone countries created an economic bailout package which was said to be worth €20 Billion Euro ($26.8 Billion). Germany’s Chancellor Angelina Merkel came up with the package which is to be used as a last resort. The only major problem with this plan is that any country in the Euro Zone (EZ) may effectively veto the package. The vote is coming up and it must be a unanimous vote. Unlike the U.S. which tried to stimulate the U.S. economy with 1.3 trillion dollars of either borrowed or printed money. The U.S. Government could later remove the extra money as necessary. Greece cannot do this alone. This is because they are a part of the Euro Zone and introducing more money would mean that the value of the Euro would go down, ultimately hurting the economies in the other countries in the EZ.