Greece and the Greek language always enthused a feeling of awe and superiority of that race in my mind. They seemed to be pioneers in thought, they were the original thinkers. Greece was strategically located between Europe, Africa and Asia. As per Wikipedia, Greece is home to the first advanced civilizations in Europe and is considered the birthplace of Western civilization.
Some of the areas and people that readily come to my mind; philosophers unparalleled even today like Socrates, Plato, Aristotle. Warriors like Alexander the great, Archimedes the great mathematician & physicist, Hippocrates the great physician who is kind of a father figure for modern medicine, Homer the epic poet and the list goes on and on…
How did this brilliant nation with a history so rich and so advanced with huge endowments of intellectual capital get it so miserably wrong?
Here is what i learnt about the crisis, Greece joined the European union in 1981 and took up the Euro as its currency in 2001 as part of joining the Eurozone. There are stipulations and conditions for member nations in order to maintain parity and health of the overall Eurozone countries. By 2004 the problems with the deficit (difference between government spending and income. Eurozone stipulation was that it should be less than 3% but Greece could not maintain it). They also hosted the 2004 Olympics and spent a lot of money through borrowings which deepened the debt crisis. The global financial collapse in 2007/8 made things uncontrollably bad. Banks were not ready to lend to Greece as they identified lack of economic and financial discipline and so Greece was borrowing from Eurozone countries and the IMF.
Greece was faced with a debt crisis that they cannot pay their creditors and was bailed out in 2011 and again in 2012. It’s estimated that the total outstanding debt of Greece in 2012 was 360 Bn Euros which came with a lot of stipulations that Greece was expected to demonstrate austerity (Tax rise to increase government earning and decrease in its spending) which meant drop in salaries/benefits and increase in taxes. The led to mass unemployment and civil unrest.
The elections in 2015 brought Alexis Tsipras to power who promised to end austerity measures, it seemed greatly populistic but there was no logical way to get out of trouble. The inability of Greece to pay back its debt installments forced Greece to risk declaring bankruptcy or exit the Eurozone and the European union. The latest bail out plan has tougher austerity expectations in terms of economic and financial discipline. Only time will tell how Greece will survive through this crisis.
Key Takeaways: Never spend more than you earn ! This conventional wisdom might seem old fashioned but It holds good for us at a personal level as much as it does to states and nations.
PS: Some excerpts of the above blog are taken from what I have read in Wikipedia and heard on BBC.
– Samuel Seelam
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