The debt crisis in Greece

Dimitrios Papadimitriou

Studenteropgave: Kandidatafhandlinger

Abstrakt

Throughout this paper, the Greek debt crisis is analyzed at full extent. Starting by presenting the structure chosen for the paper and the methods used for academic analysis, focus is poised to all the factors that lead to this crisis. By presenting both quantitative and qualitative sources, the origins of the crisis are adduced taking into consideration the last 50 years of political and financial developments in Greece. The fact that a considerable time spread is used assists the readers to comprehend all the internal and external aspects that lead to the crisis. Political and financial options misread the alarming signals for decades and worsened the situation. In addition, the widespread corruption and tax evasion prevented the public finances from a secure and sustainable path. Public administrations with narrow-minded, short-term focused policies preconceived only their political parties‟ interests instead of the ones of the whole state. Additionally, international capital markets and credit organizations encouraged excessive lending many times under burdensome terms that were into consideration. Rating agencies‟ optimistic prognoses and the stable haven of the Eurozone escalated that myopic policy. All those factors lead to the outburst of the crisis in spring 2010, followed by months of negotiations between the EU, the ECB and the IMF with the Greek government that rendered the borrowing from the capital markets impossible. Thus, two bailout packages were conscripted in order for Greece not to default on its external debt. The packages were given out with strict requests for financial compliance using a series of harsh austerity measures that caused substantial demonstrations and social unrest. The austerity measures have already enabled Greece to slash its deficit at an EU-record scale. Nevertheless, their effectiveness and sustainability are considerably questioned by both academia and policy-markers. Under those uncertain conditions Greece is called upon public finances abidance and seeing through necessary and long-delayed reforms that would create an immune political financial and social environment ready to reciprocate to the demanding juncture of the Eurozone and the EU future.

UddannelserCand.merc.fsm Finance and Strategic Management, (Kandidatuddannelse) Afsluttende afhandling
SprogEngelsk
Udgivelsesdato2011
Antal sider93