The Greek financial crisis threatened to undermine the stability of the entire European continent, and threatened the financial solvency of millions of Greek citizens.
Because of many factors outside of the control of the Greek government, and some critical miscalculations, the economy has been plunged into both crisis and depression, and there are many questions to be answered in order to satiate the concerns of citizens who rightfully wonder why this happened and what corrective action might be taken in the future.
Transition: With that in mind, I will discuss the way this situation played out, and what’s been done in its wake.
The current Greek crisis is the result of a long-running period of financial insolvency in the country. For many years, Greece has suffered from negative GDP growth, which has impacted production and consumption alike. Over time, government expenditures have grown while revenues have not been able to keep up. The Greek government has responsibilities both to creditors and to its citizens, so some level of spending was still necessary, but this cause economic problems within our country.
Various problems within the country contributed to these problems, including tax evasion and loophole exploitation by taxpayers within the country. Beyond that, mountain foreign debt held by the Greek government helped to plunge the value of Greek currency, exacerbating existing problems. We tried to cut down on these problems by chopping spending, but this made issues worse, and as a result, we find our government in the position of needing to lift Greece out of a hole while assuring consumers as to the efficacy of the government moving forward.
Transition: I will discuss the crisis, its explanations, and what the government has been thinking through this process.
I. The economic crisis was the result of a number of different factors, many of which were outside the control of the government.
A. Negative GDP growth tended to build on itself, as negative momentum ensured that one bad year contributed to additional bad quarters.
B. Government deficits were the norm, as expenditures continued to grow while tax receipts could not keep up.
i. This was the result, at least in part, of tax cheats who took advantage of the system by not paying their fair share of taxes.
ii. In addition, this was the result of a need by the government to continue spending, as we had a responsibility to provide a social safety net to support people who were needy within the country.
C. A number of different external factors contributed to the economic crisis.
i. Mounting foreign debt was problematic because other nations exerted leverage on Greece and made it more likely that our country would falter.
II. While the country is currently in an economic crisis, the crisis is one that can be worked through with appropriate corrective measures.
A. Greece finds herself in difficult straights, but putting stricter controls on government in versus out could prove helpful.
B. Implementing austerity measures to restore fiscal balance: first the government lost control of its spending and to return to normalcy, austere spending must be ensured. Only the crucial sectors require the bulk of the budgets while the rest of the sectors can wait for a better time in the future (Matthew and Thomas 42).
C. The second strategy is the privatization of the public/government assets. The Greek government has proposed to privatize assets in the region of € 50 billion before the close of 2015/2016 fiscal year. This move is geared towards managing the foreign debt that is weighing down the economic recovery. Foreign debt is in billions and keeping the government away from borrowing will give the country some breathing space. The debt is being felt even by the citizens, and the logical way is to offload some of the public assets.
D. Implementing structural reforms in all the key sectors: by the time the crisis exacerbated, the structure of the major Greece’s industries and important sectors had been broken down beyond recognition (Fotios 102): nothing was functioning in the right way. To pave way for recovery, all the major sectors need restructuring to be able to contain the growth and development that has been outlaid for the country.
E. Fighting corruption: corruption was fever high when the crisis came knocking. The government and private individuals were taking bribes, and it became a nation of a few millionaires and millions of paupers. Corruption has to be fought from its roots to ensure that all the reinvested funds and efforts do not go down the drain. The civil servants are now being censored to bring out the rot that was so evident before and immediately after the crisis took roots.
Transition: Many critics have said that the Greek government could have done more, or acted wrongly in many ways, and these things will be addressed in turn.
I. Some believe that the Greek government has been irresponsible in its spending, but much of that spending was designed to protect the social safety net.
A. With the country falling into economic upheaval, more people were out of work and needed assistance. This put a moral and economic obligation onto the government to provide for these people.
B. While the government needed to be more careful and responsible in its spending, its aims were pure, as the goal was simply to provide people with what they needed during a difficult time.
C. Even though these intentions were good, the country must take more reasonable action in the future to avoid these kinds of crises, which make life harder on the poor and unemployed anyway.
Conclusion: Lessons Learned
I. Greece will be out of the economic crisis that is for sure. The question is: will she have learned a lesson for the future? Not only Greece can learn from this crisis, other nations of the world should be able to learn lots of lessons from what caused the crisis so as to find ways to stay out of the same pit (Dimitris 88).