🇬🇷 debt crisis

Events

• 🇬🇷 was borrowing a lot and the gov’t was spending more than it earnt in taxes

• 2009 — new gov’t discovered debt had been massively underestimated as previous gov’t had been encouraged by Goldman Sachs to help qualify for Eurozone by ‘improving’ it’s debt-GDP ratio

• Investors lost confidence and interest rates on its loans went up

• Eurzone membership meant problem couldn’t be fixed easily by printing more money and also affected other Eurozone countries

• IMF and 🇪🇺 provided bailout loans and SAPs that involved austerity and higher taxes

• SAPs caused over 25% unemployment, wage cuts and protests

• 2015 — 🇬🇷 elected Syriza, an anti-austerity party, that cut itself off from the loans and SAPs, but had to crawl back to prevent economic collapse

• Troika then lent more money and attempted to reduce what 🇬🇷 owed to private banks

• 🇬🇷 needed lots of support and multiple bailouts until 2018

Eurozone debt-to-GDP limit

60%

1999 🇬🇷 debt-to-GDP

97%

2007 🇬🇷 debt-to-GDP

110%

2008 — real and fabricated 🇬🇷 deficit

• Fabricated: 6.7%

• Real: 16.7%

2011 🇬🇷 debt-to-GDP (despite loan! Caused by austerity)

172%

Current 🇬🇷 debt-to-GDP

181%

Current fraction of 🇬🇷 at risk of poverty

1/3

3 components of the Troika used to bail out 🇬🇷

1. IMF

2. European Central Bank (ECB)

3. Eurpean Commission

Yanis Varoufakis and IMF

• Ex-finance minister, Marxist

• Privately agreed with individuals w/in IMF but was being pushed for austerity by the wider organisation

Troika causing a democratic deficit

• Syriza elected on basis of being anti-austerity

• Referendum also said no austerity

• Yet Troika forced 🇬🇷 to accept austerity

Showing role of IMF

• Supporting countries in financial crisis w/loans

• Still protecting IMF and loaning country’s interests w/SAPs

Impact on general economic GG

• In favour of capitalism

• Encouragement of deregulation and privatisation