Greece is part of the European Union, meaning that its monetary unit is the same as that of all the other European countries. Therefore, its economy is tied to theirs and (more importantly) vice versa. To join the EU, a country has to show — among other things — that it is economically robust and doesn’t run a deficit greater than 3% of its GDP. It’s now universally agreed that when Greece joined the EU back in 2001, it has essentially cooked its books.
The global depression that every country experienced hit Greece especially hard. Over the past five years, Greece has borrowed €340bn from the EU and other international bodies. To afford the debt repayments, Greece made huge cuts, leaving many impoverished. When you lay off lots of government workers (as one of the many austerity measures that Greece did), you have less people paying taxes to the government. And then the government is more unable to pay off debts.
In February, a fed-up population elected the left-wing Syriza party. As Greece lagged on repayments, they were told to make more cuts, or lose aid. The Syriza government refused. Then, on Sunday, the Greek people were asked if they rejected all the conditions tied to financial aid. They Greeks voted a resounding “no”. The big problem now is Greek banks are running out of money.
While Greece has some work ahead of it, I support the “no” vote. Nameless faceless bankers should not condition future loans on the elimination of safety nets that exist to protect those who are least able to survive financial disadvantage. Basically, the central bankers support hope to promotes balance Greece’s budgets on the backs of the unemployed, the poor, the mentally ill and the marginalized.
Greece needs Europe, and Europe needs Greece and everybody knows it. They’ll work out some sort of deal, simply because all parties know they have to. Hopefully, it will country leaders, and not bankers, calling the shots.