To ask someone to explain Greece to me please(6 Posts)
As in what's happened there with the finances. What I gather it's a case of they've overspent on public services and over borrowed with no hope of paying it back
Is that right??
Yes I think so (from my limited knowledge). Also it appears they don't actually want to be made to pay it back at the rate the creditors want (i.e. more austerity for Greece) so they've voted no to paying it back and want new terms. They borrowed it but don't want to pay it back from what I can see (though I know that's very simplistic).
When they entered the Euro, they had access to very cheap money, which they borrowed aplenty and been unable to pay back when it became due.
Also not helped by the fact that income tax avoidance/evasion is rife so a lot of their policies like pensions and a corrupt and bloated public sector have been unaffordable for decades. A classic case of a champagne lifestyle on beer money.
Everything has got worse and worse as debt has been rolled over multiple time until it has now imploded big style.
Greece joined the Euro and this allowed them to borrow in the debt markets at a much lower interest rate than they should have been able to - people assumed that as they were lending Euros all of Europe was guaranteeing their debt.
Therefore they borrowed a lot, hid the state of their finances, collected very little tax, and the Government were "very generous" to "their friends" i.e. there was a lot of corruption. When the reality of the situation came to light, they needed a bailout.
This is where the situation get's complicated! There is an argument to be made that the bailout was designed to protect Europe rather than help the Greeks and that the conditions imposed are too harsh and have made the situation worse for the Greeks.
Greece should never have been allowed to Join the Euro when they did, their Government finances were already in a very bad place, and they had unsustainable spending levels, very low pension ages, high wages for government workers, but nobody paid taxes.
Unfortunately the problems with Greece were created by the politicians and the rich but it will be the general populous who suffer.
Big discussion here on the 'in the news' site. HTH.
8angle's explain is excellent, but I think misses a couple of the key stages, which is that the bailout involved European governments lending money to the Greeks to pay off their debt to private lenders. It's never a good situation to be in when you have to borrow money to pay off a loan.
What happened then, essentially, was that the Greeks weren't in a position to pay back the loan that they borrowed to pay off the original loan (unless they implemented massive cutbacks that would leave a lot of people in dire straits).
So the referendum was about whether the Greeks should accept the terms of the bailout imposed by the big lenders. They've said no, they won't - which makes what happens next very interesting.
This isn't a bad (though not complete) explanation, though aimed at Americans:
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