Greece Economic Crisis of 2011 and its Prospects in the EU as its Essay

Greece Economic Crisis of 2011 and its Prospects in the EU as its Member - Essay typeface306). The dearth stood at 12.8 percent of GDP instead of 3.6 percent of GDP (Akram et al. 307). Inflation also was higher(prenominal) than the EU average (Xafa). Greece also amass a large current account deficit. Consumers demanded foreign goods, which closureed in a current account deficit of $51.5 billion in 2008 (Akram et al. 309). Private debt as a result accumulated too. By the end of 2009, Greece was grimgraded by most rating agencies. According to Akram et al., in October 2009, Fitch had down shifted the Greek credibility to A- and further degraded to BBB+ by the end of December 2009. Standards & Poors and off also downgraded the Greece on the same grounds (306). The prognosis by many was that Greece needed to die the Euro zona (Akram et al. 306). Some even recommended that the Euro Zone should be partitioned on a north south basis (Akram et al. 306). The rely of investors was des troyed. The government failed to impose reforms. Administration also failed to properly assess the bureau in Greece prior to 2009 (Akram et al. 308). decadency levels were high too, which placed Greece at the bottom of South Europe (Akram et al. 308). Tax evasion stood at 30 percent of GDP (Akram et al. 308). Instead of flowing into government pockets, and then being used to repay the debt, this cash stayed in private hands. As a result, investors fled as Greece was downgraded. The Euro Zone was supposed to decrease exchange footstep fluctuations of its member countries. According to Mishkin, large exchange rate fluctuations damage the economy (319). They damage financial institutions and banks as fluctuations generate losses (Mishkin 319). A single, strong currency can decrease these fluctuations. The single currency is inactive overwhelmingly a...This paper is the best example of analysis of the economic crisis in Greece in 2011. The root causes of the crisis are identified , and possible ways of the crisis overcoming are presented. Prospects of the EU as an integral organization are described Origins of the crisis deceitfulness in the Greek unrestricted debt. In the 1980s and early 1990s, interest payment on human beings debt comprised a large share of the state deficit). Until the end of the 1990s, despite high levels of public debt, Greece had managed to maintain monetary control and debt regulation, largely because of the EU membership and lower interest rates it had to pay on its debt. Greece was inefficient to finance its deficit without indebting itself, because of low levels of public saving since the 1980s. As a result, most of the Greek public debt, 80 percent, ended up being owned by 2010 by foreign banks. Greece also accumulated a large current account deficit. Consumers demanded foreign goods, which resulted in a current account deficit of $51.5 billion in 2008. Private debt as a result accumulated too. By the end of 2009, Greece was downgraded by most rating agencies.The trust of investors was destroyed. The government failed to impose reforms. Administration also failed to properly assess the situation in Greece prior to 2009). Corruption levels were high too. Tax evasion stood at 30 percent of GDP. Politically, an put across by Greece could imply a disaster. The EU would not be viewed as a strong union. Investors force view it unfavorably as well, since failure to keep Greece could be viewed as a forecast for rising crises among the EU members. Moreover, if Greece exits and is bailed out at a lower interest rate, other countries would find it profitable to leave as well.