Greece Financial Crisis - Causes and Effects - Dissertation Example

Download file to see previous pages Instead, these financial organizations recommended the retrenchment of government employees. The budget deficit could have been drastically reduced by simply cutting down substantial imports of goods that people in Greece can readily produce. But the financial system needs reforms in the sense that entrepreneurs with feasible business projects should be given priority over the Investment Banking activities of banks. This dissertation recommends further impartial investigation into the banking operations in terms of the loans or funding of businesses in order to eliminate the public’s doubt over the banking system of withholding substantial funds from the needed productivity of the country. Retrenchment of employees should be the last option in finding ways to fix the budget deficit annually.

At this point in time, excessive importations valued at 200% of all exports, would be the first priority for the cutting of dollar outflows. And the top positive step should be the development of probably profitable businesses such as those being supplied by other countries into Greece. It is not conclusive that the root causes of the Greece financial crisis are overspending of government, overstaffing, and excessive debt servicing. This is because of the lack of transparency of banks in terms of disclosing where the substantial funds were loaned and how much they earned or lost.

Introduction
Overview
Greece's financial crisis as of the present had just experienced a substantial debt default in March 2012 and redemption from that default through a debt sale via bidding in August 2012. Mead and Paris (2012) reported the successful auction of bonds representing debts to the ECB wherein $ 5 billion was raised “to redeem € 3.1 in bonds held by the ECB” (equivalent to less than $ 4 billion).

The Bank of Cyprus had been buying Greek bonds for years for undisclosed or mysterious reasons, according to Kambas et. al. (2013). That redemption from debt default is far from solving the many aspects of the financial crisis of Greece, which has lasted for over a decade up to the present. This dissertation looks into the many difficult economic situations of Greece – annual budget deficits, heavy indebtedness, very high unemployment rates, low industrial productivity, low consumer confidence, and more – making the country very popular as a poor performer among members of the European Union.

Greece Problem Defined
What brought about the financial crisis in Greece over the years? How did the nation get to be heavily indebted with nearly half a trillion dollars worth of bonds payable to some countries, mainly France, Germany, the UK, the USA, and a few others? Why does Greece have a very high unemployment rate even after years of borrowing from the ECB as a member of the EU? And what would be good recommendations to enable Greece to gradually recover from the financial crisis and eventually realize positive GDP growth rates?

Hypothesis
In this dissertation, the hypothesis to be proven is that Greece had a noble aim to improve people’s quality of life. This was initiated through a series of borrowings and the decision to join the European Union member countries believing in having a common currency as a way of having strength, business alliance, and better overall performance in the management of Greece. ...Download file to see next pages Read More