The Greek Crisis: A Tragedy or Opportunity? Case Study

The Greek Crisis: A tragedy or Opportunity
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Introduction
The Greek crisis is a period between late 2009 all the way to 2018 where the Greek government found itself in a severe debt crisis. The cause of all this was due to a number of reforms that suddenly led to the loss of sources of income and property. It also led to a humanitarian crisis in the country. All these drastic events led to the country entering in recession period that lasted for almost ten years. This said to be the longest any capitalist country had suffered economic recession even overtaking the Great Depression that occurred in the U.S.
1 How did the Greek get into this difficult situation? Whose fault was this?
The financial crisis of Greek revealed that the government had been borrowing and that the nation was running in bigger deficits. Since Greek is a member of the EU, the nation was supposed to limit its deficits up to 3% of GDP and reduce its debt to 60%. However some banks like JPMorgan Chase and Goldman Sachs decided not to obey these rules and decided to borrow money to enable more spending by the government. Tax evasion by some of the citizens and businesses was another problem the country was experiencing. The evasion of taxes by the citizens was one of the factor that contributed to the huge deficits the nation was experiencing.
There are a number of reasons as to how the Greek got themselves into this situation. First of all government deficit is what contributed a big share of the crisis. The government was experiencing high expenditures compared to what they were getting in terms of tax revenues. Majority of the expenditure was spent on compensation of government employees. According to statistics revealed by the Foundation for Economic and Industrial Research based in Athens,32% of the country’s revenue was spent on compensating government employees which was 10% more than what other advanced countries were spending on average.
Pensions were also another major cause of the crisis. During that period, an average Greek employee retired at the age of 58 years and as entitled to almost 96% of their pre-retirement compared to other countries whereby the average employee retired at the age of 63 and was only entitled to a 61% pre-retirement pension (Roscini, Dimitrou, Schlefer, 2020). It was during this payment schemes that fraudulent payments were done forcing the country into a serious debt crisis. Another serious problem was the high rate of tax evasion among its ciizens.Despite the country’s income for every person standing at $20,000,75% of the government workers declared their earnings below $12,000 therefore costing the government a whopping 8% of the total GDP.
The structural changes that Greece was going through was also a major cause of the crisis as the business environment within the country was not the most favorable one. In order to start business in Greece, one...