The Critical State of Greece

Protests in Greece are spreading due to the Greek Government imposing fiscal austerity in the country in order to receive European funding to lower the government costs that were caused by growing government deficits (overly borrowing) and the decrease in tourism and shipping that was caused by the late-2000s financial crisis.

According to Business Insider, an issue occurred in the beginning of 2010 where it was reported that Greece had paid Goldman Sachs and other banks hundreds of millions of dollars in fees since 2001 in order to hide the country's actual level of borrowing. The purpose was to give Greece the capabilities of spending beyond their means in order to hide their deficit from the European Union over-seers.

The Greek Government deficit is still a serious burden. According to Bloomberg Businessweek, the Greek Government deficit was estimated to be 13.6% of the country's GDP which according to London's Daily Telegraph is one of the highest deficits in the world relative to GDP.

As a visual, below is a graph showing Greece as well as other European countries government surplus/deficit as a percentage of their GDP.



Provided by Wikimedia

 As emergency measures, the EU has established a European Financial Stability Facility (EFSF)  which is meant to stabilize the european countries that are members of the EU and are experiencing substantial government deficits. As an affect of this vehicle, fiscal austerity have been occurring  which have resulted in less public sector jobs provided contributing to the 17% unemployment rate Greece is experiencing.

Greek protestors believe the fiscal austerity, haven tightened the fiscal and monetary policies of the country, will as an end result diminish investment and economic growth for the country in the long term. This could lead to a lower employment and GDP rate in order to battle the huge government deficit.

On CNBC, John Taylor mentioned that Greece cannot take on any more borrowing and will most likely need to be given monetary funds from the EU as a gift in order to stabilize their economy. If Greece defaults then they will be excluded from the Euro Dollar and the country will be in a much worse situation then they currently are now.

Although this will not have a drastic affect upon the European Union, more Greek citizens will lose their jobs and even their homes if the government does not act right and exacerbate their debt in a smart and strategic manner.