Greece is currently about 400 Billion Dollars in Debt. That’s about 170% of their annual Gross Domestic Product. Over the next 50 years, they are scheduled to repay that debt. But with the economy in shambles, many experts wonder if that goal is really attainable.

But how did Greece end up with so much debt in the first place? And to whom, specifically does Greece owe money?

Actually, Greece became somewhat politically and economically unstable back in the 1970s after an attempted government coup. Nevertheless, after a profit spike in the 1990s, they met the fiscal requirements to join the “Eurozone” in the year 2000. This event inextricably tied Greece to stronger economies like Germany and France, and allowed Grecians more access to low-interest loans. So, public spending and government borrowing soared, even as Greece’s debt remained higher than the Eurozone average in the 2000s. When the international Recession of 2008 hit, Greece spiraled into a debt crisis. To make matters worse, in 2009, it was revealed that Greece had been falsifying reports on the debt for years. When the real statistics were exposed, their national credit rating took a plunge, which in turn, caused investors to jack up interest rates. Greece has been in the brink of bankruptcy ever since.

greece debt
German Chancellor Angela  Merkel later said that “Europe should not have accepted Greece into the Eurozone . Out of the roughly  320 Billion Dollars in bailout money that Greece must eventually  pay back, most of it, or about 47% is due to European Financial Stability Facility (EFSF). This is a temporary organization created by Eurozone members to pool money and help stabilize member countries in crisis. Greece, Portugal, and Ireland are the primary recepients of the EFSF.

19% of Greece’s debt is held by other Eurozone Governments. Another 12%  is held by private investors. And the rest about 22%  is held by the European Central Bank (ECB), the International Monetary Fund (IMF) and “treasury bills holders”, who are primarily, Greek banks.

Yet, after all the financial help, Greece remains in trouble. The unemployement rate for those aged 15 to 24 is at 55%. Further, budget cuts are so unpopular that they have led to riots and protests.




Meanwhile, Greece and other European Governments are locked in heated dispute as to whether Greece should  or even COULD make more financial reforms. Germany and France, who have invested nearly 115 Billion Dollars in the country, don’t want to see Greece default on its debt, but they are also refusing to give Greece another bailout.

During the next half century, Greece needs  to stimulate its economiy while decreasing government spending. In the end, most experts agree that Greece will not be  allowed to go bankrupt. The financial loss for other Western countries, including the United States, would be too great, and could potentially create another international recession.

To understand more about this European debt crisis, please watch this video from Bloomberg. This should be an eye opener for all of us.

So that is what happening now to Greece. Well not only in Greece but in all countries of Europe. What can we learn from this? Live only within your means! Be financially literate so that we know how to be responsible with our money like the Germans! I hope you learned a lot from this post!

Wait, how about China? Do you know about the “Housing Bubble in China”? You’ll be surprise with this article. Read it here now!


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