Greece: Glory of The Past

Greece has always been known as an advanced high income economy with high quality of life and a very high standard of living. It has been a part of Eurozone since 2001. It ranks 43^rd in terms of GDP according to the World Bank statistics in 2013. But time has changed and so has the economic atmosphere.

Euro 60 or $ 67 is the maximum daily allowance that can be withdrawn from ATMs by individuals in Greece. The Greeks are engrossed in stocking milk powder and medicines; they are not able to buy apple store apps, already hit by hiked prices, even of the necessities, they are restricted to lead life the way they previously did. The government has put capital controls. Greece, with shuttered banks and disastrous stock market, is covered with the uncertainty cloak.

The root cause behind Greece’s tumultuous situation is the way the authorities have used the funds that were made available to them. It is evident that Greeks did not put their funds in productive work that could bring prosperity to them. Though they faced large budget deficits year after year, they did not make much capital expenditure. If they had done that, they would have made money out of the efficiently used funds. Hence, the quality of deficits narrates the entire story. This would remain incomplete if it isn’t mentioned that Greeks have made expenditure, much more than their income. With more expenditure, rises the need for deficit financing or borrowing externally, which creates more liability. This is indeed a vicious circle, wherein Greece has been trapped. According to the statistics, it has borrowed roughly about 175% of its income (GDP). With such high borrowings and low income, an economic crash is an obvious situation. With these basics, one now may analyze the situation deeper and come up with various implementations, conclusions and diverse solutions.

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