Greece’s Debt Crisis

This post is like no other. I wish to talk about the Greek Debt Crisis and express my opinions about the same.
So it all began in 2010 when the Greeks ran into a current account deficit due to large number of exports. They fell in big pools of debt and gradually, they were bankrupt. This led other countries in the European Union to stop lending Greece money resulting their debts to grow even bigger. Their consumption remained the same but their expenditure continued to decrease. The International Monetary Fund, the European Central Bank and the European Commission then had to provide them with more than 240 billion euros to help them with their deficits and to help the economy reach growth. But all the money that Greek got was spent paying off international debts rather than increasing the public expenditure. The funds did help but Greek was still in high debts. Greek is now also in the fear of expulsion from the European Union itself.
To pay off these debts, the government impose heavy taxes on Greece’s products to increase the public revenue so that they can pay off their debts. But now, what I don’t understand is that if the government increases the taxes in the home country, isn’t that going to make Greece’s products more expensive to buy compared to other countries? The imports will increase even further resulting an increase in the CAD. The government surely doesn’t want to do that. The taxation should decrease and the public expenditure should increase, implying the expansionary fiscal policy. Also, Greece should concentrate on increasing its exports, visible or invisible. The government needs to increase the aggregate demand for its own economy. Tourism is a good point for Greek, they should concentrate on raising revenue levels from there.
To the Greeks, here’s my message: May the odds be ever in your favor.

One Comment Add yours

  1. startlepedia says:

    its a highly complex, I like your view about it.

    and yep May the odds be ever in their favor.

    Liked by 1 person

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