Greek Debt Crisis Karla Montiel 1913122

Greece: Crisis and Solutions

What is the crisis? 2009: • Admitting its budget deficit would be 12.9% of GDP. Greece´s credit ratings lowered • Drove up cost of futures loans • Making it more unlikely that Greece could find the funds to repay its debt. 2010 • Austerity package, designed to reassure the agencies it was fiscally responsible by lowering the deficit to 3% of GDP by 2012. DEFAULT ALARM! • The EU and the IMF have provided a total of €240 billion in emergency funding in return for austerity measures.

●No more early retirement Austerity Measures

● Reduced pay for public workers ● Large-scale cuts to social programs ● Repayment of the reduced debt.

Slowed the Greek economy

Unemployment rose to 25%

Greece's debt to GDP ratio had risen to 175%,

Riots erupted in the streets, and the political system was conflicted

Causes • 2001: Greece adopts the euro • Lower interest rates and an inflow of investment capital and loans. • It spent more money than it took in • Mass tax evasion  it limits revenue.

Consequences • Austerity Measures Needed • Social and Political Conflicts • Unemployment • “Working Very Hard”

Possible Solutions • Deal with the long term solvency problem • United States Deal • Dual Currency Solution  ”Fractional Reserve Banking” Allowing private banks to create money and spend it in ways that will maximize their own profits, regardless of other (national) interests.}

References •

Krieg, Gregory. (2011).

An Idiot´s Guide to Greek Debt Crisis. ABC News.

http://abcnews.go.com/blogs/headlines/2011/11/an-idiots-guide-to-the-greek-debt-cr isis/

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Amadeo, Kimberly. (2014)- What is the Greece Debt Crisis?- US Economy. http:// useconomy.about.com/od/Europe/p/What-Is-The-Greece-Debt-Crisis.htm

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Plummer & Laurence. (2011). Greece Crisis: Is there a Solution?. News Europe. BBC News. http://www.bbc.co.uk/news/world-europe-13856783

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A Dual Currency Solution to the Greek Debt Crisis. The NEF Blog. http:// www.neweconomics.org/blog/entry/a-dual-currency-solution-to-the-greek-debt-crisi s