What does the Greek debt mean for Europe?
While protests continue in Athens and elsewhere, the Greek financial 'tragedy' is causing many analysts to wonder what the repercussions will be for the rest of Europe. The reasons behind the debt are many: poor public spending by less than scrupulous politicians, and the nation's continued borrowing, being among the prime suspects. But many Greeks are conflicted about who should shoulder the blame. Most, it seems, are relieved to be part of the Eurozone in a time like this because their confidence in their own politicians is so low that a bailout from Brussels seems like a godsend. Others are adamant that the IMF, Goldman Sachs [http://eurocheddar.com/tag/goldman-sachs/], and Deutsche Bank are the culprits that lead them down this slippery path, something along the lines of, 'Well, you shouldn't have lent us the money in the first place.' There may be some truth to that, but public wages doubling in the last decade and a retirement age of 50 hasn't helped the governmental balance sheet.
The UK, despite an almost equal budget deficit percentage, has its own currency and won't be directly affected by the bail out (the Euro-sceptics will all too easily allude to this at the pub), whilst the fifteen other Eurozone economies will be picking up the tab. The problems for the rest of Europe will not just be helping out this repayment, but the markets could feel something of a domino effect, thus hurting struggling economies like Portugal and Spain. Investments dry up for these nations because the risk is so great and this leads to interest rate hikes making it impossible for nations in trouble to borrow. The spiral continues.
Hopefully the bailout package, including big spending cuts and tax increases (something the UK has always been better at) will help, but many Greeks are opposed to these austerity measures, as are the Germans. There is also talk of Greece leaving the Euro altogether, and this would certainly cause major ripple effects and could be catastrophic for the other nations, causing mayhem on the international markets. For now, it's a question of wait and see. This is a big test for the Eurozone, and one that won't be resolved anytime soon.
The UK, despite an almost equal budget deficit percentage, has its own currency and won't be directly affected by the bail out (the Euro-sceptics will all too easily allude to this at the pub), whilst the fifteen other Eurozone economies will be picking up the tab. The problems for the rest of Europe will not just be helping out this repayment, but the markets could feel something of a domino effect, thus hurting struggling economies like Portugal and Spain. Investments dry up for these nations because the risk is so great and this leads to interest rate hikes making it impossible for nations in trouble to borrow. The spiral continues.
Hopefully the bailout package, including big spending cuts and tax increases (something the UK has always been better at) will help, but many Greeks are opposed to these austerity measures, as are the Germans. There is also talk of Greece leaving the Euro altogether, and this would certainly cause major ripple effects and could be catastrophic for the other nations, causing mayhem on the international markets. For now, it's a question of wait and see. This is a big test for the Eurozone, and one that won't be resolved anytime soon.
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