Greece Blog: Greek Economy and Crisis Lecture

June 11th, 2017

This morning we met with our lecturer talking about the Greek Economy and Crisis with Dr. Sophia Dimelis. We met her at the Athens University of Economics and Business. She started off by giving us an overview of the crisis and what happened in the past that led up to the crisis. Greece is a small country. For almost the entire existence of Greece they have had a closed economy which means they do not export things. Greece is also in a spot that is on the edge of two different political powers. For a long time Greece was ruled by the Romans and then later by the Ottoman Empire. This means they never really established their own political system that was strong and based on their values. The political system in Greece before the crisis was notoriously corrupt. If a person knew someone working in the government they could have their friend take care of anything that they needed. Tax evasion has been a major issue in Greece. Greece is a country with a lot of self-employment, so the people were reporting their taxes way less than they were actually making. The economy also was never really developed because of very high interest rates.

Greece joined the Euro Area in 2001 which means they converted from their own currency to the euro. Now in the Euro Area interest rates were lower and Greece had an easier time borrowing money. So now the government had money and they started spending more of it. Because of this spending and borrowing money the government was accumulating a lot of debt. Unemployment levels were rising. Prices started to rise making Greece become less competitive in the world market. Greece was running a deficit that was turning into tons of debt. The government was spending more money than was coming in and they were spending more money to import items and not exporting anything to make that money back. Basically all of these factors came together in a whole crashing crisis and Greece had to be bailed out. This bail out was contingent on Greece making changes in their government. These changes came in three stages of reform and after each stage the Euro Area would review the Greek government and look at everything they were doing to see if the reforms were up to their standards. If they were they would pass and if not Greece would have a second chance for review and if they did not then Greece would automatically default. But still Greece has no real economy, they are not growing because they are using all of their money to payoff debt and are continuing to borrow money to payoff debt.

While walking around Athens it was hard for us to tell the real effects of the crisis. There is a lot of graffiti in the city depicting phrases and images talking about the crisis and the government. Our lecturer was telling us the crisis had affected her and her family. She had government bonds that lost almost all of their value. It was really hard for people to find jobs because most people work for the government and there were just no jobs to be had. A lot of educated people ended up having to leave Greece because they could not get the kind of job that they wanted. The reforms that were put into place are helping Greece to get back on its feet but there is still so much work to be done. Unemployment rates are still very high. The debt is still accumulating and in our lecturer’s opinion Greece may never be able to pay it off because it is so massive and includes interest. This debt will continue to fall on generations to come. There still is not any major growth in the economy because there is no money going towards purchasing of items. The crisis and the aftermath is really taking a toll on the Greek consumer. The Greek people are also being taxed incredibly high. It is amazing that this great country is going through so much and yet the people here are truly some of the happiest and nicest people I have ever met. I have no doubt that they can come out of this strong. 

Sara Weldon

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