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Old May 9th, 2010, 6:07 pm
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Alastor  Male.gif Alastor is offline
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Join Date: 16th February 2003
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Crisis in Greece, the Euro Area and the European Union

The Greek economy and the possibility of EU and IMF bailing out the country have made headlines for a time already. Political decisions always take time and now when finally both the Greek parliament has accepted the very harsh conditions for the bailout loan and the parliaments of the biggest Euro countries have approved giving a bailout loan of 110 billion , the crisis is already spreading outside the Euro area. And outside the EU too. Some experts have already claimed that this is the worst crisis the EU ever had to face. 110 billion seems not to be enough to save the situation. Today (May 9th) the finance ministers of the whole EU are meeting to see what can be done to stabilize the Euro and to prevent anything like this from happening again.

When Greece joined the Euro area in 2001 their government appears to have fiddled with their numbers and was thus accepted on false premises. Their economy hasn't improved since then and by now the national debt is too big for getting further loans with reasonable interest rates. As a member of the Euro area the classical way out of trouble by devaluation is closed for Greece. The planned bailout is, of course, not an act of altruism. It's purpose is to save the .

The markets seem to fear that both Spain and Portugal who both have quite big national debts too will follow soon.

The harsh conditions for the bailout includes among other things wage cuts for civil servants, huge tax increases and a huge increase in the retirement age which is the lowest in the entire EU. The people of Greece is of course not happy with that and the country has lately suffered some demonstrations, riots and strikes. A few days ago three people lost their lives in a fire started by throwing a Molotov cocktail through a window of a bank.

Some questions to start with:
  1. Do you think Greece should be kicked out of the area and left to sort out their problems themselves?
  2. If yes, what do you think would happen before they get enough new Drakhmas out in circulation?
  3. Do you think they should be left to sort it out themselves but not kicked out?
  4. Do you think bailing them out is the right thing to do?
  5. If so, do you think 110 billion is enough?
  6. What do you think will be the consequences of this crisis on a) The Euro area level, b) The European Union level, c) A global level?
  7. What do you think will be the consequences for the people of Greece? Widespread poverty? More riots and strikes? What else?
  8. Do you think that Spain and Portugal will follow soon?
  9. Do you think that Greece will ever be able to repay the loans?
A Reuters article with more links to further reading: http://uk.reuters.com/article/idUKTRE6461B920100508


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