EU Bailout of Greece

One may wonder how Greek got itself into such a mess. The Collapse of the Wall Street is an incident that happened in 2008 and it resulted to great effects especially to the countries whose markets were closely linked to the financial markets in the United States. Greek was among the countries that were hit hard and its debt records were recorded highest in 2009 (Times, 2016). After announcing their deficit figures, Greece was restricted from borrowing in the financial markets and by 2010 the country was headed to bankruptcy and this would the mark the start of the financial crisis. 2010 bailout by IMF a) Greece received €100 Billion over 3 years George Papaconstantinou announced that Greece had accepted a bailout package with the IMF. Includes spending cuts (€ 30 Billion) and increases taxes The conditions were tough at the time because there were severe pension and wage cuts and taxes were hiked.

This had a great effect on the unemployment rates as it increased. b. 2013: Greek Parliament agrees to measures Parliament approved the austerity budget and this was one of the hardest since the 2nd world war. The incident happen after relentless protests had happened which had paralyzed the country that was debt-stricken. At the time IMF refused to make any more contributions up until creditors provided sufficient debt relief. The reason for this is because previously they had offered bail out worth $257 billion over two bailouts. IMF argued that they could only bail out if Greece received help from other sources as well because then it would be easy for it to repay its debts (Petroff, 2015). Economic Ramification of Greek Crisis Bank credit contraction 1.

Loss of interbank lines Banks in Greece could no longer lend rather they called in for loans. The country was dependent on loans from the central bank to take care of their funding gaps. Greek Default on third bailout Greek in no time plans to default on its public debts and impose capital controls as seen from the recent political and economic developments. Defaulting means that Greece could exit from the Euro in a period of twelve months. Consequently, the political and economic crisis will definitely get worse and as a result the state will fail. European Central Bank IF Greece defaults ECB can decide if to continue giving emergency loans to Greeks banks or to completely pull out. The main reason for the crisis in Greece was caused by high unemployment rates and the failure to collect enough tax revenue.