Many Americans are understandably confused about the financial crisis in Greece and how it effects the rest of the world—including the U.S. While you don’t have to be an expert financial analyst to comprehend what’s going on, you do need to know something about past and current events to fully appreciate the severity of Greek’s financial downfall.
- Years of poor financial planning and unrestrained spending put Greece in a vulnerable position when the global recession started around 2010
- The country’s current debt measures approximately 174% of the gross national product. To better understand, that’s like a household that earns $80,000 per year carrying nearly $150,000 of unsecured debt. In comparison, the U.S. national debt is approximately 71%
- With more debt than they could afford to pay, many lenders have refused to give Greek banks more money
- The unemployment rate in Greece is the worst in the entire European Union—25.6%. Overall, the average unemployment rate in Europe is 9.6%
- At the end of July, Greece owes the European Central Bank a payment of almost $4 billion. The country is already in arrears to the International Monetary Fund for just under $2 billion
- Greece’s financial default ultimately threatens the fiscal health of the European Union and strength of the Euro.Strengthening the dollar in comparison to the Euro seems like a win for the U.S., but in fact, the new dynamic would create a number of financial problems. Weakened European currency could mean a tremendous loss for the U.S. in export contracts and other opportunities
- Greek officials insists there is no threat to food or fuel supplies for its citizens; however, Greeks are limited to how much money they can withdraw from local ATMs and banks
In a recent vote, the Greek people rejected the latest proposals—more money for stricter austerity measures—from their creditors, the European Commission, The International Monetary Fund and the European Central Bank.
For more information on the Greek debt crisis go to http://www.bbc.com/news/world-europe-33441183