...capital markets have become more illiquid, Greece may no longer be able to roll over its maturing debt obligations. Some analysts have discussed the possibility of a Greek default. To avoid such a default, however, the Greek government has introduced a variety of austerity measures and, on April 23, 2010, formally requested financial assistance from the other 15 European Union (EU) member states that use the euro as their national currency (the Euro zone) and the International Monetary Fund (IMF).Greece’s debt crisis has raised a host of questions about the merits of the euro and the prospects for future European integration, with some calling for more integration and others less. Some have also pointed to possible problems associated with a common monetary policy but diverse national fiscal policies. This report provides an overview of the crisis; outlines the major causes of the crisis, focusing on both domestic and international factors; examines how Greece, the Eurozone members, and the IMF have responded to the crisis; and highlights the broader implications of Greece’s debt crisis, . Greece’s Debt Crisis: Background Build-Up to the Current Crisis During the decade...
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... and structural rigidities in the economy. This affected the state’s ability to fund government budget and current account deficits, resulting in profound borrowing. As the situation progressed for the worst, the Creek economy relied heavily on international capital markets, which only aided in making the country extremely vulnerable to any shifts in investor confidence. Access to capital at low interest rates after adopting the euro, and weak enforcement of European Union (EU) rules concerning debt and deficit ceilings facilitated Greece’s accumulating high levels of external debt. In October 2009 investors became jittery due to the actions of the newly elected government in revising the estimate of the government budget deficit for 2009 from 6.7% of gross domestic product (GDP) to 12.7% of GDP (Nelson et al., 2010). A few months later, however, in April 2010, Eurostat, the European Union (EU)’s statistical agency, estimated Greece’s deficit to be even higher, at 13.6% of GDP. Subsequently Greece’s investors grew fearful of the country’s potential inability to repay its maturing debt obligations. Domestically, the government sought to control the situation by raising funds through the selling of bonds and the implementation of austerity...
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...come together in order to attain the same objective, primarily economic growth. Or in the main case peace, that resulted in the formation of the EU post world war two. The European Union is an economic and political grouping of 27 member nations, which are located in Europe. It was first called the EEC that was founded in 1957, but now formally known as the EU which was fully established when the Maastricht Treaty came into force on 1st November 1993. The original objective of the EU was to create such single market, so that there was the free circulation of goods, capital, people and services within it. The integration of the economies was largely thanks to the introduction of the Euro in 1999. Every grouping for the countries can hold consequences both positive and negative. To analyse this in depth, we can use Austria who joined the EU in 1993, with the aim of gaining greater security for its borders by being able to rely on military support . Along with security, quotas would be removed by becoming a member of the EU which is only an added benefit considering the majority of EU’s trade is with EU members and as a result greater access to the prosperous markets of West Germany. By contrast Norway became the first nation to reject membership to the European union in 1994. This result came amid growing concern that membership to the EU would result in a decrease in farming subsidies that they currently receive from the Norwegian government therefore jeopardising the farming...
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...The Impact of the EU on Greece’s Economy INT 650 9-2 Short Paper Greece is one of the most affected country’s that entered into the European Union because the unification of the economies of the sovereign states in the region known as Europe is limiting their ability to emerge from their own financial crisis. In-order for Greece to devise a solution to their current national debt they must negotiate with the leaders of the European Union to create terms that will allow them the ability to correct their economy. However, the social unrest that this delay of negotiations is causing continues to inhibit Greece from moving forward in-order to restore stability to their country. Russia is interested in helping the country, but this would violate the terms set by the EU; plus the population of Greece is split between the ideas of removing itself from the European Union and entering into another agreement with other nations such as Russia. The Unification of Greece into the Union was not the creation of their financial issues, but is hindering the ability of the country to correct it in-order to help its citizens. The country is experiencing tremendous instability in their banking system due to the distrust of the people losing their money in the banks because the government fears that if they do not freeze the people’s accounts a rush to withdraw their cash will occur once the announcement after June, 2015 passes that a resolution for Greece’s debt was not agreed upon...
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...The Euro Debt Crisis: Greece’s and its Next Move Matthew Schrock Financial Markets & Institutions Dr. Victoria Geyfman December 6, 2012 “The Euro Crisis and Greece’s Next Move” The Euro currency, during its original preparation and issuance, had been seen with optimism. It was presumed that the new union of European markets would create a new economic power within Europe, matching it with other economic leaders such as the U.S. and other powers. At this point in history, the Euro seems to be on the brink of despair. The European Monetary Union had determined and established the prerequisite diplomacy and policy making to assure a newly created stable and integrated economy of Europe. The reality of this new currency and monetary union is far from the original optimistic outlook. Policy set forth in the original agreements and conditions of the European Monetary Union that had been established before its adoption had been treated without regard by countries. This disregard started with deceit from Greece but quickly became almost the status quo. Greece is known as the catalyst and a scapegoat within the views of the Euro debt crisis. Greece is on the brink of insolvency and others are following. Options are available in this time of uncertainty, whether they are conventional or not, that could result in Greece remaining within the Euro and accepting austerity or altering their status and participation within the monetary union. The decision that will be...
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...technical process. * The level of economic integration between nations is also rising. The most well-known example of this is the European Union (EU). Forms of economic integration * The first level of formal economic integration is known as a free-trade area or agreement (FTA). Under a FTA all members remove tariffs on the products traded with each other, while maintaining their individual tariffs with the rest of the world. One of the issues with this form of integration is that non-member counties will export their products to the member country with the lowest external tariff and then into any of the other member countries with higher external tariffs, this practice is known as transhipment (Appleyard, Field & Cobb, 2006: 376). * The second form of economic integration is known as a customs union (CU). A CU retains all the elements of a FTA but in addition involves the abolishment of their individual external trade policies. This is done by establishing a common external tariff (CET) which removes the possibility of transhipment by non-members. Members of a CU also typically negotiate any multilateral trade initiative as a single unit. The elimination of the need for rules of origin is the single biggest benefit of a customs union over a free trade area. This reduces confusion amongst members and leads to simplifies legal and administrative processes (Holden, 2003). * The third level of economic integration is known as a common market. A common market...
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...single currency, the Euro. The idea of creating a single currency for the European Community was first mentioned in the 1970 Werner report, which led to the establishing of the European Monetary System (EMS), the forerunner of the Economic and Monetary Union (EMU). The Maastricht Treaty (1992) made EMU a part of EU law and set out a plan to introduce the single currency (the Euro) by 1999. The Maastricht Treaty also established certain budgetary and monetary rules for countries wishing to join the EMU (known as the convergence criteria). In 1998, 11 member states (Germany, France, Italy, Belgium, Luxembourg, the Netherlands, Spain, Portugal, Ireland, Austria and Finland) undertook the final stage of EMU when they adopted a single exchange rate, which was set by the European Central Bank (Britain, Sweden and Denmark negotiated an opt-out from this final states of EMU). The new Euro notes and coins were launched on 1 January 2002. There are currently 16 EU states in the Eurozone. Greece joined the initial 11 members in 2001, Slovenia joined in 2007, Cyprus and Malta in 2008, and Slovakia joined in 2009. Estonia is due to join the Eurozone in 2011. All future members of the EU must adopt the Euro when they fulfil the convergence criteria. Economic and Monetary Union (EMU) Step 1: a country loses a degree of economic sovereignty when it enters a trade bloc or single market as a necessary step towards being part of an EMU. Stage 2 – Joining a trade bloc or single market: to join a...
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...www.capitalvia.com G lobal Research Limited I MPACT of G REECE White Paper - Impact of Greece Crisis Global Research Limited Introduction Historically, financial crisis tend to lead to sharp economic downturns, low government revenues, widening government deficits, high levels of debt, pushing many governments into defaults. This is called SOVEREGIN DEBT CRISIS. GREECE is currently facing this, it accumulated high levels of debt during the decade before the crisis, when capital markets were highly liquid. As the crisis has unfolded and there was liquidity crunch in world economy, Greece may no longer be able to rol over its maturing debt obligations. Build – Up To The Current Crisis Between 2001-2008, Greece reported budget deficits averaged 5% per year, compared to Eurozone average of 2%. Also, its current account deficits averaged to 9% per year compared to Eurozone average of 1% Greece funded these twin deficits by borrowing in international capital markets, leaving it with chronically high external debt (115% of GDP in 2009) Some of the facts which can be depicted from following charts : www.capitalvia.com 2 White Paper - Impact of Greece Crisis G lobal Research Limited How Country Debts And Budget Deficits Compare? Projected budget deficit for 2009 Budget deficit figs as % of GDP Debt as % of GDP 68.6% UK 13% 112.6% Greece 12.5% 54.3% Spain 11.25% 65.8% Ireland 10.75% 114.6% Italy ...
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...www.capitalvia.com Global Research Limited IMPACT of GREECE White Paper - Impact of Greece Crisis Global Research Limited Introduction Historically, financial crisis tend to lead to sharp economic downturns, low government revenues, widening government deficits, high levels of debt, pushing many governments into defaults. This is called SOVEREGIN DEBT CRISIS. GREECE is currently facing this, it accumulated high levels of debt during the decade before the crisis, when capital markets were highly liquid. As the crisis has unfolded and there was liquidity crunch in world economy, Greece may no longer be able to rol over its maturing debt obligations. Build – Up To The Current Crisis Between 2001-2008, Greece reported budget deficits averaged 5% per year, compared to Eurozone average of 2%. Also, its current account deficits averaged to 9% per year compared to Eurozone average of 1% Greece funded these twin deficits by borrowing in international capital markets, leaving it with chronically high external debt (115% of GDP in 2009) Some of the facts which can be depicted from following charts : www.capitalvia.com 2 White Paper - Impact of Greece Crisis Global Research Limited How Country Debts And Budget Deficits Compare? Projected budget deficit for 2009 Budget deficit figs as % of GDP Debt as % of GDP UK 13% Greece 12.5% Spain 11.25% Ireland 54.3% 68.6% 112.6% 65.8% 10.75% 114.6% 5.3% Italy Germany 3.5% 74.3% Source:...
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...GREEK ECONOMIC CRISIS: CAUSES & EFFECTS Objective: To study the factors that lead to the Greek Economic Crisis and its effects on other other countries including India. A. IMPORTANCE Greece is normally known for mythology and coliseums, but for the past year, and probably well in to the future, Greece is making headlines for less mythical reasons. Greece has earned the reputation of being that family member who can't seem to get out of money trouble and, in turn, is always asking for a loan. Also, like that same family member, the chances of getting that money back isn't high. Greece is on the brink of bankruptcy and many economists believe that they are already bankrupt. Greece's debt has reached 160% of their gross domestic product. When debt reaches 100% of gross domestic product, it is cause for major concern. What's worse, they don't have the capacity to do much about it. Greece can't artificially change the buying power of their currency because they are part of the eurozone, and they can't easily raise taxes because they don't have an efficient or well-developed system of collecting taxes. If all of that isn't enough, the citizens of Greece are growing increasingly upset with their government, which is causing political turmoil as well as economic. Greece owes so much money to other countries that each citizen owes $40,000! 1. We Live in a Global World The world is no longer a collection of countries, many of which have little effect...
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...the world. Greece was the first state to receive a bailout from the European Union and the International Monetary Fund, surprisingly followed only six months later by Ireland. The goal of this thesis is to analyze the challenges posed to smaller, weaker economies within the eurozone, specifically Greece and Ireland, since the recent eurozone financial crisis. This study is based on the experiences of both Greece and Ireland as very different members of the single currency. How and why did these states meet the criteria for euro convergence? To what extent was there support for the euro in both countries in the past? To what extent is there support today after the near collapse of both economies and the rescue packages brought about by the EU? As a result of the recent financial crisis, Greece and Ireland are facing difficulties with the terms of European economic and monetary union. Since these smaller economies are, among other reasons, unable to devalue the currency in order to regain economic competitiveness as members of the single currency, they are...
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...MAster’s in Global Management 2012/13 | EUROZONE CRISIS | Prof. Ricardo Lima | | Anar husseynov, Girish Medh, Shakeb Assri. | 1/2/2013 | Hochschule Bremen University of Applied Sciences | Contents 1.Introduction 3 2. History 3 2.1. The Werner Report — EMU in three stages 3 2.2. Snake in the tunnel 4 3. Purpose of single currency 5 4. Gross Domestic Product 5 5. Inflation 7 6. SWOT ANALYSIS 8 6.1. Strength 9 6.2. Weakness 9 6.3. Opportunities 9 6.4. Threats 10 7. Eurozone Crisis. 10 8. Greece’s Debt Crisis: Background 12 8.1. Build-Up to the Current Crisis 12 8.2. Financial Assistance from the Eurozone Member States and IMF 14 8.3 Why didn’t Greece leave the Euro? 15 9.Recommendations 17 10. References 18 1.Introduction The euro (symbol: €; banking code: EUR) is the currency of 17 EU member states. It was launched on 01.01.1999 virtually, but physically launched from 01.01.2002. The currency is the second most traded currency after the US dollar. The currency is used by around 332 million people daily. €915 million in circulation, highest combined value of Bank notes in circulation in world. The countries that use the euro are Finland, Austria, Belgium, Cyprus, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia and Spain. If you are planning a trip to Europe then the euro is the currency you will need for most of the locations you visit. There are additional countries...
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...Greece has been struggling for more five years to overcome its financial crisis. At the end of 2009, the problems for Greece started emerging when the newly-elected government realised that the country was heavily in debt. In the meantime, both Greek banks and the government were graded by rating agencies as dramatically low, as the country's debt had peaked (Tseronis 2014). Furthermore, in 2010, reports concerning accounting irregularities for the statistics which the Greek government delivered to Brussels caused the media to put Greece on the spot and raised concerns about the sustainability of the Greek debt and the country's credibility (Tseronis 2014). Thus, Greece became the first EU member to activate a bailout package from the newly set up European Financial Stability Facility (EFSF) and representatives of the European Commission (EC), the European Central Bank (ECB), and the International Monetary Fund (IMF), commonly referred to as the ‘troika’, in May 2010 (Gemenis & Nezi 2015; Tseronis 2014). Afterwards, Greece required a second bailout programme in February 2012 and an agreement that led to a third bailout after marathon negotiations, on 13th July 2015. The aim of this essay is not only to describe and analyse how Greece reached a third bailout but also to investigate if this programme could be the end of the Greek and euro crisis. It is divided into three main sectors: the first one is about the previous bailout programmes as well as the reasons for their failure...
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...International Management Globalization October 9, 2015 Globalization is the process of social, political, economic, cultural, and technological integration among countries around the world between nation and nation (Luthans and Doh). Globalization for every region, country, and city-state within a country has gone through globalization many times, in various different ways. There are many ways and reason for a country to go through globalization, by choice to advance and become relevant with the rest of the world, or by force by other nations. Globalization has a long history. The Greek globalization goes back all the way through ancient times. They began to spread across Asia in its southwestern sector, northern Africa and then onward to southern Europe. Alexander the Great would be a main reason as to how Greece provided its globalization matters into these other regions. In fact, there are cities named for Alexander in Iraq (Iskandariya), Egypt (Alexandria), and Turkey (Alexandria Troas) (Geo). When it comes to globalization there are many different factors that come into play as to what degree of globalization can occur. For Greece there were many positive factors in play. Physical characteristics such as the topography of the soil were a huge factor. There is also the vast presence of natural elements and the climate that goes along with it. If a country can globalize on what nature gives them on a daily, monthly or yearly basis, there is great reason to globalize...
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...nav Citations: http://lec.sagepub.com/content/26/6-7/594.refs.html >> Version of Record - Nov 17, 2011 What is This? Downloaded from lec.sagepub.com at UNIV OF GUELPH on November 17, 2013 Review article The euro crisis Andrew Jones Local Economy Policy Unit, London South Bank University, UK Local Economy 26(6–7) 594–618 ! The Author(s) 2011 Reprints and permissions: sagepub.co.uk/journalsPermissions.nav DOI: 10.1177/0269094211421748 lec.sagepub.com ´ ˜ Marco Buti, Servaas Deroose, Vıtor Gaspar and Joao Nogueira Martins (eds), The Euro: The First Decade, Cambridge University Press: Cambridge, 2010; 1048pp: ISBN 978-9279098420, £95 (hbk); Roy H. Ginsberg, Demystifying The European Union: The Enduring Logic of Regional Integration (2nd edn), Rowman & Littlefield: Lanham, MD, 2010; 422pp: ISBN 978-0742566927, £21.95 (pbk); Michael Mitsopoulos and Theodore Pelagidis, Understanding the Crisis in Greece: From Boom to Bust, Palgrave Macmillan: Basingstoke, 2011; 272pp: ISBN 978-0230237773, £65 (hbk); Peadar Kirby, Celtic Tiger in Collapse: Explaining the Weaknesses of the Irish Model (2nd edn), Palgrave Macmillan: Basingstoke, 2010; 288pp: ISBN 978-0230237445, £19.99 (pbk); ´...
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