Greek Economic Crisis- an overview

Greece is a developed country, with a high standard of living and “very high” Human Development Index, ranking 22nd in the world in 2010, and 22nd on The Economist’s 2005 worldwide quality-of-life index. According to Eurostat data, GDP per inhabitant in purchasing power standards (PPS) stood at 94 per cent of the EU average in 2008. Greece now has become the prodigal son of the Modern Europe. How come?
I am no Alan Greenspan and my financial wizardry consists only from hand to mouth so let me try to figure out in my own way where the fault lies.
Something is terribly wrong with Greece so much for sure. Consider these basic facts:
1. The Greek labor force, which totals approximately 5 million, works the second highest number of hours per year on average next to South Korea.
The Groningen Growth & Development Centre has published a poll revealing that between 1995 and 2005, Greece was the country whose workers worked the most hours/year among European nations; Greeks worked an average of 1,900 hours per year, followed by Spaniards (average of 1,800 hours/year)
2. Greece’s main industries are tourism, shipping, industrial products, food and tobacco processing, textiles, chemicals, metal products, mining and petroleum. Greece’s GDP growth has also, as an average, since the early 1990s been higher than the EU average.
3. Global economic malaise affected Greece as well. As a result of the on-going economic crisis, industrial production in the country went down by 8% between March 2010 and March 2011
4. Corruption is endemic. .( Greece has the EU’s lowest Corruption Perceptions Index, Index of Economic Freedom and Global Competitiveness Index, ranking 78th, 88th and 90th in the world respectively.)
5. Tax evasion or laxity in collecting tax is also a way of life. Between 2008 and 2011 unemployment skyrocketed, from a generational low of 7.2% in the second and third quarters of 2008 to a high of 16.6% in May 2011, leaving more than 820,000 unemployed. In the final quarter of 2010, youth unemployment reached 36.1%
Greece was accepted into the Economic and Monetary Union of the European Union by the European Council on 19 June 2000, based on a number of criteria (inflation rate, budget deficit, public debt, long-term interest rates, exchange rate) using 1999 as the reference year. After an audit commissioned by the incoming New Democracy government in 2004, Eurostat revealed that the statistics for the budget deficit had been under-reported.
Members of the European Union signed an agreement known as the Maastricht Treaty, under which they pledged to limit their deficit spending and debt levels. However, a number of European Union member states, including Greece and Italy, were able to circumvent these rules and mask their deficit and debt levels through the use of complex currency and credit derivatives structures. The structures were designed by prominent U.S. investment banks, who received substantial fees in return for their services and who took on little credit risk themselves thanks to special legal protections for derivatives counterparties. Ack: wikipedia ( To Be Continued)
benny

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A Quote

‘Life is full of riches, and of sweetness that in giving flows back to who shall care to possess it, and of love that in giving without strings attached, grows exponentially and surrounds the giver and the given as one. It is all ours. How come then we want to make riches as our be all and end of our life’s expectations?’
benny

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