High public sector employment combined with high borrowing, meaning that the government has to make cuts and make cuts to the numbers it employs - as the largest employer that means a lot of people end up unemployed. Unemployed people don't contribute by buying things or paying taxes, making the situation worse. Put simply, they borrowed too much during the boom years, and as the global economy went into recession, they were harder hit than most. The failure of the government to act immediately means they only got into more trouble. This has re-surfaced as the latest bail out failed - as it always would - still the Greek government is borrowing more money, this time from the other Euro countries, and not cutting its spending enough to balance out the two. In a country where avoiding tax is something of a national past time, this isn't good news - It's the sort of financial mismanagement that makes Brown look like a genius.
The government also fiddled the figures, so everyone thought they were in a much better state than they were.
Their involvement in the Euro also limits what the government can do to help boost the economy.
They may not be booted out the EU, but it's quite likely they will have no choice but to leave the Euro - to be honest I think most people are surprised they've lasted this long.
For almost the whole of recorded time, Greece has had a history of defaulting on loans, yet the Banks, once they had joined the Euro were hurling money at Greece at attractive rates, gambling on the Eurozone bailing them out when it all went pear shaped.
The economy of Greece relies on tourism, fishing, fetta and olive oil. They used to also have great maritime trade, but that has almost disappeared. Traditionally, their wealthy elite avoid taxes at a great rate, only the regular employees pay anything like the correct tax rates. They lied to get into the Euro, hid their borrowing, the Euro did not have an easy way to deal with their problem when it finally came to light at the same time as the Global credit crunch.
They will not be "booted out", I suspect that within a year they will be eased out however..
1. Their government lied about Greece's economic position when they joined the Euro.
2. The country was a military dictatorship (thanks to US intervention) from 1967 to 1974. This was a good political reason for wanting the sad little country aboard in the EU. BUT
Dictatorships cause tax fraud and 'offshore' bank accounts to proliferate. Government employees stop working but keep earning. (Criticism of the State was illegal).
4. Then Greece joined the EU. Its standard of living increased as quickly as its national debt.
They used international loans to pay government subsidies, wages, social services etc.
I do not think that I am alone in not wanting them to get another cent of my taxes.
Greece has only around 11 million people and , going by the money the EU pays them, all Greeks are on unemployment benefit!
The 500 million + people in the EU should not allow Greece's 11 million beggers destroy the EU.
They should be made to get their affairs in order and live within their means or leave the Euro and perhaps the EU as well.
Could someone summarise why Greece is facing so much economic trouble right now. I know there has been a global recession recently, but why has Greece been hit so badly. I heard they had 6.2% drop in there economy, which techinally means they are in depression. Why is Greece in such a sorry state.
And will they be booted out of the EU.??
