Can Greece Escape Its Debt Crisis? Not Anytime Soon

How many cautionary tales do we need about the perils of getting overly in debt? The obvious takeaway from the above video is to avoid it like the plague.

Given how much of a miserable place Greece has been for the last several years, it’s a good lesson for everyone on the importance of being fiscally responsible.

Sorry if this sounds like a lecture, but if you’ve been following the news, you’d be well aware that the Greeks are being strangled by debt. Much of it is their own making, and they’ve had some bad luck, i.e., the 2008 global financial crisis.

They’re now over $400 billion in debt, which is around 170 percent of their annual GDP.

How it happened

Stepping back a bit, in the 1990s, Greece then met the fiscal requirements to join the EU, and it made the Euro-zone in 2000. With this, it tied Greece to stronger economies such as Germany and France, which allowed them greater access to low interest loans.

After Greece joined the Euro-zone it quickly got into too much debt. (Image: IM/Flickr)

After Greece joined the Euro-zone, it quickly got into too much debt. (Image: IM/Flickr)

Soon enough, public spending and government borrowing rose, becoming greater than the Euro-zone average. When in 2008 the global financial crisis hit, Greece was caught with its pants down and it was sent into a debt crisis.

A year later, and it was discovered that Greece had been fudging its debt figures, and the country’s credit ratings took a dive, which caused investors to turn up interest rates.

Greece has been on the edge of bankruptcy ever since.

See the above video about who the Greeks owe money to. The country has received plenty of financial help, but it remains in trouble, with an example being that 55 percent of the people between the ages of 15 and 24 are unemployed.

Budget cuts have proved highly unpopular, sometimes causing riots or protests.

Damage done to a bank in Athens following protest in 2010 against austerity cuts. (Joanna/Flickr)

Damage done to a bank in Athens following a protest in 2010 against austerity cuts. (Image: Joanna/Flickr)

Somehow, Greece has to figure out how it is going to pay back all the money it owes. It needs to find a way to stimulate its economy while cutting spending. Maybe its too hard an ask for the current far left government, who tried their futile best a few months ago saying that Germany owes them $300 billion in war reparations.

Now, according to the video, financial experts say Greece won’t be allowed to go bankrupt because the financial costs of such an action upon other countries would be too high, and it might even create another international financial crisis.

Sounds like there’s no clear way out of this mess, and the Greeks might be just spinning their wheels for a while.

Either way people, I’ll end how we began—just make sure you avoid getting into debt.

See the video below on what happens if a country does go into bankruptcy:

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