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Greek Economic Crisis Essay

1523 words - 6 pages

For the past 5 years, the Greek public has been suffering from an economic crisis. NBCnews.com puts this into a perspective that everyone can understand: Imagine taking a 40% pay cut. Then on top of that you suffer an increase in sales tax to 23%. Add on an increased price on electricity, and a newly formed tax on heating oil. All of that and a $10 price tag on a gallon of gas is enough to ruin a business. That's exactly what happened to Leo, who declined the use of his last name in the NBC interview. Leo, a 64 year old painter of religious figures, saw his business dry up before his eyes. The money ran out and he ended up living on the streets. Evicted from his home, Leo took what he could to his new home, a metal bench near a park in central Athens. He spent 45 days with what he called "The unhappy homeless." What angered Leo the most is that the government is to blame. "They borrowed. Everytime they needed money they borrowed and then borrowed some more." Although one of the biggest issues for people, the Greek economic crisis is also one of the least talked about issues. Large economies such as the United States and China are in the news much more than Greece, yet according to BBC news, the Greek unemployment is 28% compared to the 6.6% of the United States. The Greek government has overspent and borrowed money repeditally for the last 15 years, which could lead to them leaving the euro, causing a domino effect on the rest of Europe.The majority of the causes of this issue are economic, understandably, since it is a debt crisis. For the past 20 years, Greece has been grossly overspending. They have spent money on everything from one of the most expensive railroad systems in Europe, to the 2004 Olympics that cost the Greeks over 11 billion dollars. Also, according to marketplace.org, despite only having the 31st biggest military in the world, Greece continues to spend 4% of their GDP on their armed forces. This amounts to another 9 billion dollars. But those three costs alone aren't enough to put a nation into a financial crisis. Greece has been living beyond its means even before it adopted the Euro in 2001. Once they did, public spending skyrocketed. The same BBC news article explains how public sector wages rose 50% between 1999 and 2007, a much higher number than in the rest of Europe. The problem with this is that all of the money that Greece was spending was borrowed from private lenders and large banks around the world. What made this such an important issue is that the Greek government was hit by widespread tax evasion. According to Adair Morse, a professor at the business school of the University of California-Berkeley, 40% of the Greek population didn't pay their taxes, leaving the Greek government with very little revenue. If Greece had been receiving the money they were supposed to be receiving from taxes, they would've been able to pay for much of their debt, and this would not be nearly the issue it is today. Lots of spending...

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