For those who live in Greece, or who follow global economics, it has become all-too-familiar to hear about the current debt crisis in the country. Now requesting its third bailout, this once powerful country is struggling to simply stay afloat. Though many of the citizens are starting to feel the affects of this unfortunate situation, some are wondering what it could mean for the whole of the European Union (EU), or even other countries around the world.
Of course, while some financial experts are using this as an example of failed government controls, others are simply wondering how large this crisis could become. The citizens of Greece are likely worried whether or not they will be granted another bailout and some suggest the EU will not be able to afford such a measure. So, what exactly is Greece trying to do to fix this situation?
Back in July, many people around the world were looking to the situation in Greece and wondering how it would resolve. The Greece Government had instituted a variety of measures to help avoid additional challenges, including a €60 (£43 or $66) limit on ATM withdrawls, which would help to keep money in the banks and ensure they would have more leverage. Naturally, this type of measure is not something the citizens are happy to see, but if it helps regain some stability, it will definitely be accepted. Regardless, the measures are just Band-Aids, and if the root of the issue cannot be resolved, the country could be in serious trouble.
Just like the US Great Depression in the 1930s, many worry the Greece debt crisis will actually spill out beyond the countries borders and begin affecting other regions. In today’s global economy, it is important to remember countries are often reliant on one another to maintain a sustainable environment. Put in simple terms, if Greece does not receive bailout money it will be forced to make major cuts to its infrastructure. This will cause its industries to falter and any imports and exports will be disrupted. The countries that send or receive these products will then have their own financial problems.
Of course, it is also important to realize Greece is not the only country in the EU that is operating thanks to bailout money, which has led some to think the entire system in that region might be in trouble. Having a standardized currency might sound like a good idea, but like the US Dollar it really doesn’t operate with any sort of stable backing. As history has shown, this type of currency is not sustainable forever.
Some financial pundits warn this is a perfect example of what can happen when the government overspends. Having a country dependent on foreign debt can really put you in a vulnerable spot, which makes it difficult to maintain autonomy in the world. The problem is, when outside support fails, who are you supposed to turn to? By cutting government spending, they could greatly decrease the amount of money they need, but they would also be cutting off those citizens who have become dependent on the services. In other words, there is no way to fix the problem without hurting someone.
So, will they be able to get the bailout money they need? More significant perhaps, will a third bailout really help fix the problem?
How far do you think the Greece debt crisis will expand. Will the European Union be able to survive if countries like Greece are having such significant financial crises?