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Financial Crisis: Greece. By: Hong Lai Sylvia Zheng. Discussion Topics. Background Information Greece’s Imports and Exports Causes of Financial Crisis Financial Crisis in Greece How Greece Financial Crisis Affect Other Countries Solutions. Background Information.
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Financial Crisis: Greece By: Hong Lai Sylvia Zheng
Discussion Topics • Background Information • Greece’s Imports and Exports • Causes of Financial Crisis • Financial Crisis in Greece • How Greece Financial Crisis Affect Other Countries • Solutions
Background Information • Greece, a Parliamentary Republic • Prime Minister, George Papandreou • Capitalist economy with the public sector accounting for about 40% of GDP • Member of EU • Greece joined in 1981 • In 2001, 12th member of the European Economic and Monetary Union
Greece’s Imports and Exports • Greece imports twice as much as they export
Greece’s Imports and Exports • Exports(2009 estimated)-$21.37 billion • Manufactured goods, food and beverages, petroleum products, cement, chemicals • Major markets: Germany, Italy, Bulgaria, U.S., U.K., Romania • Imports(2009 estimated)-$64.27 billion • Food and animals, crude oil, chemicals, machinery, transport equipments • Major suppliers: Germany, Italy, France, Netherlands, Russia • Tourism is the main income for Greece • Provided 15% of GDP
Causes of Financial Crisis • Public debt: 126.8% of GDP (2009) increased to 144% of GDP (2010) • Inflation: 1.2% (2009) increased to 4.5% (2010) • Unemployment rate: 9.4% (2009) increased to 12% (2010) • Current Account Balance: -$34.43 billion (2009) to -$17.1 billion (2010)
Financial Crisis in Greece • Government overspending with its national debt is $413.6 billion • Paying out salaries on the government dime, with huge holiday bonuses • Employees were paid a 14-month year instead of 12 months • Also, the extra money gave many Greeks in their early retirement • One of the worst countries with debt in Europe • National debt, at €300 billion (aka $413.6 billion), is larger than the country's economy • Prediction estimated that the national debt will reach 120% of GDP in 2010 • The country's deficit is 12.7% of its national economy
How Greece Financial Crisis Affect Other Countries • Contagion • If Greece is not helped, it could drag down the entire European Union • Threatening economies: Portugal, Spain and Italy • The impact on the common European currency • 15 other euro zone economies who have agreed to help out Greece • IMF announced a bail-out package €95 billion ( $146.2 billion)
Solutions • What Greece implemented • Raise taxes on fuel, tobacco, and alcohol • Raise the retirement age by 2 years • Decrease government spending • Recommendation • Sterilization • Decrease Unemployment • Fix Inflation Rates ?
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"Commission Recommendations for Greece." European Commission Economic and Financial Affairs. EUROPA, 2 Mar. 2010. Web. 27 Feb. 2011. <http://ec.europa.eu/economy_finance/articles/sgp/2010_02_03_sgp_en. htm>. Castle, Stephen. "Pressure Rises on Greece to Explain and Fix Crisis." Global Business. The New York Times, 16 Feb. 2010. Web. 26 Feb. 2011. <http://www.nytimes.com/2010/02/17/business/global/17euro.html?_ r=2>. Wearden, Graeme. "Europe's Financial Crisis: As It Happened." Guardian | Guardian.co.uk. Business Blog, 28 Apr. 2010. Web. 27 Feb. 2011. <http://www.guardian.co.uk/business/blog/2010/apr/28/greece-financial- crisis>. Pearlstein, Steven. "Greece and the Myth of the Easy Economic Fix." Politics, National, World & D.C. Area News and Headlines - Washingtonpost.com. The Washington Post, 05 May 2010. Web. 26 Feb. 2011. <http://www.washingtonpost.com/wp- dyn/content/article/2010/05/04/AR2010050405128.html>. "An Explanation of Greece's Financial Crisis." YouTube- Broadcast Yourself. YouTube, 09 Apr. 2010. Web. 27 Feb. 2011. <http://www.youtube.com/watch?v=KGPNBA6T-sk>.