INSIDE EUROPEAN ECONOMY

                         EUROPEAN ECONOMY TODAY

Hey, friends The capital of Greece, Athens. A city- a country that has been through the worst economic crisis over the last 10 years Greece is on the verge of default tonight Greece is the latest European economy to be on life support Greece is expected to default For now it eases some worries of the global economy I'd put the Greek economic crisis at the second spot after Venezuela economic crisis Why did this happen? What were the reasons behind this? How did it affect the residents here and how is it still affecting them today? We will find about all of this in this ground report of today Come, let us see Let us begin our story right from the start Greece joined the European Union in 1981 At that time, its debt to GDP ratio was 28% That is the ratio of the country's debt to the country's GDP 28% is considered to be a good ratio Infact, if the debt to GDP ratio is below 60%, then it is considered good If it rises above that, then it is said that the country's debts are rising and its economy is floundering Due to the mismanagement of the government that was in power here from 1981 to 1999 Its debt continued to rise They spent more money than they had The country's debt to GDP ratio reached 97% by 1999 The European Union had also launched the Euro currency in 1999 Greece, too wanted to become a part of the currency and wanted Euro notes to be used in their country too But there was a criteria of the European Union If any country wanted to use the Euro currency, then they had to fulfill the Mastricht Criteria That is, a country's debt to GDP ratio should be less than 60% if they wanted to use the Euro They believed that otherwise, if a country had a lot of debts and it took up the Euro currency, then it will not be able to handle it or bear it It is obvious that Greece's debt to GDP ratio was not less than 60% But despite that Greece accepted the Euro currency in 2001 How was it able to it is a scam in itself. It is a long tale in itself Basically, Goldman Sachs is a company They helped Greece conceal its debt and indulge in hyperbole They kept the fact that their debts were so high hidden And by fooling the European Union in a way, they adopted the Euro currency But this did not have a lot of effect at that time In fact, there was considerable growth until 2008 GDP per capita kept rising rapidly. The people too were very happy Employment was also on the rise. But so was the debt behind the doors Then came the economic crisis in 2008 Its gonna be one of the watershed days in the nation's market's history It was a manic Monday in the financial markets We're in the midst of a serious financial crisis and the federal government is responding with decisive action Although the 2008 financial crisis had a negative influence on all countries, but it had a disastrous effect on Greece especially, because structural problems had already existed in its economy before Furthermore, when their government changed in 2009, the new Prime Minister revealed that the previous government had been fudging data on a large scale for years They were saying that their budget deficit was 6.7% But actually, it was crossing 15% This maligned Greece's reputation across the world Investors lost their trust and felt that they could not trust this country and that they should withdraw their investments The credit rating of this country was downgraded And people were scared of investing their money because they knew that the country could not afford to pay back So overall, until 2010, the debts continued to rise and no one was ready to lend any money The economy began to crash drastically The Greek government's immediate priority is to convince the Europe that it can control its budget deficit We are ready to take any necessary measure in order to make sure that our goal of cutting our deficit by 4% in 2010 What effect did all of this have? Greece used to be a 300 billion dollar economy in 2010 Its GDP growth rate stayed in the negatives for so many years that by 2017, it fell to be a mere 200 billion dollar economy Unemployment rate- which was 10% in 2010 It soared to 28% in 2013 At its peak, the Youth unemployment rate was 60%, that is, 60% of the youth living in this country were unemployed The situations have somewhat improved today, but the youth unemployment rate stands at 40% The people have been driven down on the streets literally and this is quite visible One does not expect this from Greece which is a developed country in some ways They educated people who could afford to leave, began to exit the country because they saw no future in this country Alongside, Greece was also going through an aging crisis The fertility rate here was already very low In 2005, Greece's population was at its peak- at 11 million Today, this population has fallen to 10.5 million and at the rate at which the population is declining in Greece, it would have fallen to only 8 million by 2050 If so many people leave the country, what effect would it have on the ground level? A lot of shops here have shut down You will find a lot of buildings here in which construction has been stopped midway Buildings have been abandoned and the infrastructure is in a terrible state Right behind me is one such Olympics stadium which lies in decrepit as you can see They've put up barriers to prevent anyone from going inside, but from the glimpse that we can catch of the interiors it seems as if there's nothing inside. Everything is in a dilapidated condition and has been abandoned Some cats have been residing here And there are some similar buildings here Some trash is lying around Walking here seems like walking through a post-apocalyptic situation as shown in the movies This week, the Prime Minister "celebrated", if that's the word, 100 days in office He told Greeks again, that they must change or sink We know the severity of the crisis is unprecedented And much worse than we originally thought But this is not the time for minor steps We need to be brave and decisive What can a government do in such a situation to improve the economy? and to reduce its debt? Think about it It is obvious that the money being spent by the government should be reduced as much as possible and to increase the government's revenue as much as possible so that they remain in surplus and pay back their debts Basically, cut down spending and increase revenue How can this practically be done? Slash the pension and the social benefits being given out the people And increase the tax- the VAT, the corporate tax upon the people These are called "Austerity measures" in economics You could ask that won't it anger the people if the government does this? because basically, austerity measures involves taking money from the people and giving it to the government to enable the government to pay off its debts This does happen The people do get angry- they were furious in Greece as well And there were riots in 2015 due to these austerity measures The people came out on the streets and resorted to rioting Last week, demonstrators battled the police in downtown Athens furious about tax hikes they've already suffered as well as job losses and an overall pay cut of 20% Unofficial estimates put the real number of unemployed people at 40% This sign says that Greece should just walk away from its massive debt and its an idea a lot of Greeks support The danger is that it could trigger a catastrophic and global financial meltdown Usually when a country faces such economic crisis, there is another option apart from austerity measures that is to devalue its currency- to reduce the value of its currency by printing more notes A lot of countries do this. It was done in Venezuela and Zimbabwe in extreme cases that led to their currency becoming devalued very swiftly It is debatable as how successful this solution is. But in the case of Greece, this solution was not possible because its currency was Euro and Greece was not the sole country using Euro There were other European countries (using it) as well So it was not in the hands of Greece to devalue its currency so this solution was not available to Greece Another interesting thing is that European Union too, did not want Greece's economy to flop and for Greece to completely crash down as a country because that would affect the reputation of the Euro currency and experts believed that if Greece's economy did crash, then it would negatively affect the rest of the European nations In fact, a lot experts also believed that it could trigger another financial crisis worldwide had Greece crashed completely And this is why, even the European countries wanted Greece to become successful and they were trying extremely hard to keep the economy of Greece from crashing And they made bailout plans for this purpose The country needs a 17 billion dollars emergency loan, mostly from European banks and governments by the start of July just so it can pay the interest on its massive debt The IMF and European Union gave the first bailout, worth 110 billion Euros, to Greece in 2019 This meant that this amount of money was given by both these organizations to Greece and in return asked Greece to implement austerity measures in its country But this bailout failed. This huge amount of money was indeed given but it could not revive Greece's economy And so, a second bailout was given in 2012 and Greece was asked to implement even more austerity measures in exchange By 2015, the residents here got so irate that they voted for an anti austerity party who were promising to put a stop to austerity measures in their country and were promising to hike the salaries and wages of the people 40 year old Syriza leader Alexis Tsipras a politician who promises to restore dignity to the country that says is being humiliated by the demands of its international lenders Supporters cheered as he set to take charge in the country Greece is turning up hate Greece is leaving behind the catastrophic austerity Syriza has convinced Greeks to reject austerity but the hard part will be to convince Europe as well But by 206-17, this party too realized that Greece had no other option that they had to implement austerity measures if they want to revive their economy After this, a third bailout of 86 billion Euros was provided and by 2018, its positive results finally began to dawn Now, finally, the GDP growth rate of Greece's economy has slightly risen The situation looks like its getting under control But as of now, Greece owes around 280 billion Euros, in total, to the European Union and IMF in exchange of all these bailouts And Athens (Greece) has promised that by the t=year 2060, they would stay in budget surplus and not run in deficit But there's a visible hope for economic revival After years of staying in the negative, Greece's GDP growth rate finally climbed into positive in 2017 and it has been predicted that it will remain 2.4% for 2019 And even if they continue to grow at this rate, by the time they reach 2030, then the size of its economy will grow to become what it used to be in 2010 So overall, Greece endured a loss of 20 years because of this economic crisis While revival, the tourism sector will play a very important part because tourism is a major sector that drives Greece's economy For example, this is a huge tourist attraction here These monasteries that you can see behind me are a great tourist attraction We can learn immensely from the story of Greece First of all, I'd like to ask you what lessons could you imbibe from this story which could serve as an inspiration for our country and what are the things that our country should keep in mind Write down in the comments below In my opinion, It is obvious that you will compare India's situation with that of Greece There are some vast differences. For example, Our country is in a slowdown while Greece was in a recession And the second difference is that the debt to GDP ratio of our country is 68% The condition is not as bad as Greece's Not that massive debt has been accumulated Another difference is that our country has its own currency If any such situation does arise, then the government would first try to devalue our currency which can be done easily, unlike in the situation of Greece But there is one important thing to observe in Greece of which the Indian government should be mindful and that is the way data fudging is done by the governments And what bad a negative influence it exerts on the country's reputation The Indian government does this too Fudging the GDP data, showing fake data, concealing the unemployment data The government of Greece did all of this as well That is a very important lesson that we can learn from this economy All of this is my opinion I hope you would have liked this article. Share it.

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