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International
Finance
Topic:
Greece’s debt crisis and the negative impact to European currency community.
Class: Banking 56
Group Member:
1.
2.
3.
4.
5.
6.
7.
8.

Cung Quynh Anh
Nguyen Ngoc Kieu Anh
Nguyen My Linh
Pham Hong Tu Linh
Vu Ha Linh
Vu Trinh My Linh
La Thu Phuong
Hoang Phuong Quynh
Hanoi, April 17th , 2017


CONTENTS:

I.
II.
III.

Overview: Greece before crisis.
The reasons of Greece’s debt crisis.
Timeline of Greece’s debt crisis: Greece’s action, Bailout of Eurozone and

IV.
V.
VI.

other organizations.
Negative impacts on Greece’s economy, Eurozone.
Greece’s current situation.
Conclusion.


I.

Overview: Greece before crisis:

II. Greece is classified as an advanced,high-incomeeconomy, and was a founding

member of the Organisation for Economic Co-operation and Development (OECD)
and of the Organization of the Black Sea Economic Cooperation (BSEC). The country
joined what is now the European Union in 1981. In 2001 Greece adopted the euro as
its currency, replacing the Greek drachma at an exchange rate of 340.75 drachmae
per euro. Greece is a member of the International Monetary Fund and of the World
Trade Organization, and ranked 34th on Ernst & Young's Globalization Index2011.

III. World War II (1939-1945) devastated the country's economy, but the high levels

of economic growth that followed from 1950 to 1980 have been called the Greek
economic miracle. From 2000 Greece saw high levels of GDP growth above the
Eurozone average, peaking at 5.8% in 2003 and 5.7% in 2006.
IV.
V.

The reasons of Greece’s debt crisis.

VI. Greece's debt crisis is due to the poor financial management of public finances

coupled with government spending that is too great to surpass. As a result, Greece's
budget deficit exceeded 13% of GDP and total public debt accounted for nearly 130%
of GDP (2010). Possible causes of Greek public debt are:
Firstly, low domestic savings led to external borrowing for public
spending: In the 1990s, the average saving rate for Greece was only 11%, much lower
than the 20% Countries such as Portugal, Italy, and Spain tend to plummet.
Therefore, domestic investment is heavily dependent on external capital inflows;
Bond yields continued to fall as a result of joining the European Union (1981) and the
wave of sell-offs of bonds showed that Greece had managed to slip away from an
already-mobilized channel of government Greece strengthens its debt financing for
public expenditure.
VII.

Second, high public spending leads to budget deficits: Greece's GDP
growth is still acclaimed with an average annual growth rate of 4.3% (2001-2007)
compared to the regional average. The eurozone area is 3.1%. However, at this stage,
government spending increased by 87% while government revenue increased by only
31%, resulting in a budget deficit that exceeded the EU's 3% GDP. According to

economists, the cumbersome and ineffective public sector of Greece is a major factor
behind the country's deficit.
VIII.


IX. According to the Organization for Economic Co-operation and Development

(OECD), public expenditure on public administration in total public expenditure in
Greece in 2004 was much higher than in other OECD countries while the quality and
quantity Service is not much improved. In 2008, the global financial crisis erupted
into Greece's key industries. The tourism and shipping industry, revenue declined by
more than 15% in 2009. Greek economy is also in a difficult situation, the revenue
source to finance the state budget is narrowed dramatically. Meanwhile Greece must
increase public spending to stimulate the economy. Post-crisis stimulus spending in
2008 also exacerbated public debt. As of January 2010, Greek public debt was
estimated at 216 billion euros and the debt level reached 130% of GDP.
X. Aging and pension systems in the most generous European region of Greece are

also considered as one of the burdens for public expenditure. It is predicted that the
proportion of people over 64 years of age in Greece will increase from 19% in 2007
to 32% in 2060. Retirees receive an amount equal to 70-80% of the official salary
before retirement. The benefits from other supportive mechanisms with full 35 years
of service compared to 40 years in other European countries. Estimated total
payment for public sector pensions in Greece will increase from 11.5% of GDP (2005)
to 24% (2050).
XI. Third, declining revenues are also a factor leading to budget deficits and

increasing public debt. Tax evasion and underground economic activity in Greece are
factors that reduce budget revenues. According to the World Bank, the informal
economy in Greece accounts for 25-30% of GDP (compared to 15.6% of Vietnam's

GDP, 13.1% of GDP in China and Singapore. 11.3% of Japan's GDP). The high tax rate
and complex laws, together with the excess and ineffective regulation of regulators,
are responsible for tax evasion and underground development in Greece.
According to Transparency International, Greece is one of the countries
with the highest levels of corruption in the EU. Not only do workers not pay taxes,
but the bribe is quite popular from central to local. In 2008, more than 13% of the
Greeks spent up to 750 million euros in envelopes for public and private sector
leaders, including doctors who demanded more money for the surgery; City planners
are the ones who decide the time when building permits are granted and local
officials are also involved in bribery cases. Greek Prime Minister George Papandreou
acknowledged that "systematic corruption" was the most fundamental problem that
led to Greece's public debt. The damage that corruption causes to Greece is
estimated at about 8% of GDP. Corruption not only caused tax evasion, it also
increased government spending, aimed at maintaining high salaries for civil servants
and executing large investment projects rather than targeting projects that created
many jobs. Make and improve labor productivity. High salaries not only create a
XII.


budget burden but also make the competitiveness of the Greek economy weak. High
salaries, the euro appreciated from 1 euro to 0.8 US dollars to 1 euro to 1.6 euros
during the period 2000-2008 makes the competitiveness of Greek goods weak and
consequent. Inevitably a constant trade deficit.
Fourth, easy access to foreign capital and ineffective use of capital: In
addition, joining the Eurozone in 2001 was a great opportunity for Greece to gain
access to capital markets. Internationalization with the use of a currency guaranteed
by the major economies of Germany and France, together with the monetary policy
management of the European Central Bank (ECB). Thanks to joining the Eurozone,
Greece has a steady and stable image in the eyes of investors, easily attracting
foreign investment at low interest rates. For nearly a decade, the Greek government

has been selling bonds for hundreds of billions of dollars. This amount could have
helped Greece's economy move a long way if the government planned to spend
reasonably. However, the Greek government has spent too much (mostly for
infrastructure) spending hardly paying attention to repayment plans leading to
increasing debt levels.
XIII.

Fifth, the lack of transparency and confidence of investors: The lack of
transparency in Greek statistics has lost the confidence of the investors it has created
as a A member of the Eurozone and rapidly emerging the wave of capital withdrawal
massively from the banks of Greece, pushing the country into difficulties in raising
capital in the international capital markets. Dependence on foreign finance has made
Greece very vulnerable to changes in investor confidence. In the era of international
economic integration, transparency is always a big demand of investors. The public
debt crisis in Greece is due to the government's lack of transparency of data, trying
to draw a rosy picture of the budget status of forthcoming policies to overcome
budgetary constraints or problems. As a result of macroeconomics, the effect of such
policies will be severely curtailed.
XIV.

XV.
Timeline of Greece’s debt crisis: Greece’s action, Bailout of Eurozone and
other organizations.
1. From 2001 to 2014:
XVI.

XVII.

2001: Calm before the storm: Greece joins eurozone


XVIII.

January 1, 2001

XIX. Formerly invited in June 2000, Greece becomes the twelfth country to adopt

the single euro currency, ditching its former drachma.


XX. To qualify, Greece had to demonstrate signs of a healthy economy, including

meeting targets for price stability and public finances. The country had not qualified
to join bloc when it was established in 1999.
XXI. 2004: Greece confesses to exaggerating figures
XXII.

November 15, 2004

To enter the euro zone, certain economic conditions must be met. In late
2004, however, Greece's government admits that it has under-reported the country's
budget deficit figures between 2000 and 2003.
XXIII.

A deficit of under 3 percent was required to enter the single currency—
however, after a review by the EU's statistics agency Eurostat, Greece's finance
minister said it had not fallen below this level since 1999.
XXIV.

XXV.


2009: Downgrades: Greece is taken down a peg

XXVI.

December 8, 2009

Fitch downgrades Greece's credit rating to "BBB+" from "A-" marking the
first time in a decade that the country has fallen below "A" status.
XXVII.

It comes after the then-finance minister, George Papaconstantinou,
warned that Greece's deficit could climb to 12.5 percent of gross domestic product
(GDP) during 2009—much higher than expected.
XXVIII.

Over the following weeks, a number of other agencies also lower their
credit ratings for Greece, fearing its economic recovery is losing its footing. Greece
unveils stability programme on January 14, saying it will aim to cut its budget gap to
2.8 percent of GDP in 2012 from 12.7 percent in 2009.
XXIX.

XXX.

2010:

XXXI.

Greece approves harsh austerity package, anger ensues

XXXII.


March 3, 2010

. Greece must refinance 54 billion euros ($66.6 billion) in debt in 2010,
with a crunch in the second quarter as more than 20 billion euros becomes due and
market yields for Greek debt soar. The Greek government approves a tough austerity
package, including public sector pay cuts, pension freezes, and tax rises on cigarettes,
alcohol and fuel
XXXIII.

Trade unions in Greece react with anger, setting the stage for violent
protests in Athens as the cuts take hold.
XXXIV.
XXXV.

Greece: The economic rescue begins


XXXVI.

May 2, 2010

The International Monetary Fund and euro zone members agree on a
financial aid package for Greece worth 110 billion euros ($146 billion), amid fears
that the country's fragile economy could put the whole region in jeopardy.
XXXVII.

Greece accepts more cuts as part of the deal, but violent demonstrations
erupt as protesters demand an end to austerity.
XXXVIII.


Euro zone leaders agree to create joint financial safety net, with IMF, to
help Greece and to try to restore confidence in euro.
XXXIX.

XL. Since 2010, Greece has received two bailouts worth 240 billion euros.
XLI. May 10 - Global policymakers install an emergency financial safety net worth

about $1 trillion to bolster financial markets and prevent the Greek crisis from
danaging the euro.
XLII.
XLIII.

2011:

XLIV.

Greece gets a major debt haircut

XLV. October 26–27, 2011

After negotiations lasting a whole night, Europe's leaders agree to slash
Greek debt as the country's financial problems continue.
XLVI.

Private investors will take a 50 percent "haircut"—or writedown—on their
Greek bonds, which will be converted into new loans.
XLVII.

XLVIII.


Greek PM Papandreou resigns

XLIX.

November 6–11, 2011

L. After assuming office in October 2009, George Papandreou's time as Prime

Minister of Greece is marked by (often unpopular) efforts to deal with the country's
financial crisis.
LI. After weathering the storm for two years, he resigned following a coalition

agreement between his PASOK party and conservative rivals.
LII. 2014:
LIII. Resurrection: Greece returns to bond markets
LIV. April 10, 2014


LV. Investors celebrate as Greece makes its official return to the bond markets, after a

four-year break.
LVI. High demand for its five-year bonds led some to dub this the "beginning of the

end" for Greece's bailout—although this now looks a little premature.
LVII.

Prime Minister loses key vote

LVIII.


December 29, 2014

LIX. Greece's government, led by the New Democracy Party, is thrown into turmoil

after parliament refuses to endorse then-Prime Minister Antonis Samaras'
presidential candidate.
LX. A snap election is called for January, and the popularity of radical left-wing party

Syriza raises some concerns about the future of its bailout program.
LXI.
LXII.

EXPLANTION

The debt crisis started in 2009 when Greece announced its actual budget
deficit was 12.9% of Gross Domestic Product (GDP), more than quadruple the 3%
limit mandated by the European Union (EU). Credit rating agencies lowered Greece's
credit ratings, driving up interest rates.
LXIII.

Usually, a country would just print more money to pay its debt. However,
in 2001 Greece had adopted the euro as its currency. For several years, Greece
benefited from its euro membership with lower interest rates and foreign direct
investment, particularly from German banks. Unfortunately, Greece asked the EU for
the funds to pay its loans.
LXIV.

In return, the EU imposed austerity measures. Worried investors (mainly
German banks) demanded that Greece cut spending to protect their investments.

Greece government agree with this deal and received aid package
LXV.

However, these measures lowered economic growth and tax revenues. As
interest rates continued to rise, Greece warned in 2010 that it might be forced to
default on its debt payments. The EU and the IMF agreed to bail out Greece but
demanded further budget cuts in return. That created a downward spiral.
LXVI.

By 2012, Greece's debt-to-GDP ratio was 175%, one of the highest in the
world. It was after bondholders, concerned about losing all their investment,
accepted 25 cents on the dollar. Greece is now in a depression-style recession, with a
25% unemployment rate, political chaos, and a barely functioning banking system.
LXVII.


That mean people cant affort to buy more and led to the decrease of GDP even much
worse
Moreover, gorverment cut down salary and pension for citizens, which
made the anger in all country. This made the decision of citizens to Prime Minister
loses key vote and the austerity package stopped immediately
LXVIII.

2. 2015:
LXIX.

Syriza elected

LXX.


January 25, 2015

Led by Alexis Tsipras, anti-bailout party Syriza sweeps to victory and forms
an unexpected coalition with right-wing Independent Greeks party.
LXXI.

Electing a party that aims to abolish austerity may have lifted Greek spirits,
but investors across the world were worried amid growing fears of a possible
"Grexit"—or Greece exiting the euro zone.
LXXII.

LXXIII.

Euro zone approves bailout extension

LXXIV.

February 24, 2015

Euro zone finance ministers approve a four-month bailout extension for
Greece, after the country's new government submitted reform proposals just ahead
of the deadline.
LXXV.

The measures include controlling public spending and cracking down on
corruption and tax avoidance.
LXXVI.

LXXVII. Greece is given a schedule of repayments to different creditors between


April and June 2015, however not all of these dates have been met.
LXXVIII. Misses IMF payment
LXXIX.

June 30, 2015

Investors and politicians watch Brussels and Athens with baited breath, as
Greek prime minister, Alexis Tsipras, and creditors went back and forth over reform
proposals. However, midnight on June 30 comes and goes without a deal and
Greece's international bailout expired.
LXXX.


The country also effectively defaults on a 1.5-billion-euro ($1.7 billion)
debt repayment to the International Monetary Fund (IMF). This makes Greece the
first country to miss a payment to the IMF since Zimbabwe in 2001.
LXXXI.

LXXXII. Referendum goes Tsipras' way
LXXXIII. July 5, 2015
LXXXIV. In a shock move, Greek Prime Minister Alexis Tsipras holds a public vote on

whether to accept the austerity-heavy creditor proposed bailout deal.

LXXXV. Tsipras advises Greek to vote "no," which they duly do—61 percent come

out against accepting a deal.

LXXXVI. The referendum is viewed by the Syriza party as strengthening Tsipras'


hand against accepting further austerity. However, it also increases the risk that
creditors will give up hope of any deal, potentially pushing Greece towards a "Grexit"
from the euro zone.
LXXXVII. Final, final deadline?
LXXXVIII.

July 12, 2015

LXXXIX. Members from all 28 countries in the European Union will meet on Sunday

to discuss Greece's latest deal proposals, which are due to arrive on Thursday.

The Sunday summit will follow a meeting of euro zone finance ministers on
Saturday and is widely seen as the last chance for Greece to strike a deal and avoid a
forced exit from the single currency zone.
XC.

On Tuesday, European Council President Donald Tusk said that this week
was the last chance for a Greece agreement.
XCI.

"I have to say it loud and clear that the final deadline ends this week. All of
us are responsible for the crisis, and all of us have a responsibility to resolve it," he
told reporters at a press conference.
XCII.

 The poverty rate of Greece had risen from 2.2% in 2009 to 15% in 2015,

equivalent to 1.6 million people.
 Obviously, the economic crisis had spread not only from the national scale,

but also from small localities in the country.


 In January 2015, the leftist government of Prime Minister Alexis Tsipras won










the general election with a commitment to say no to “austerity”. But after
months of tense negotiations with European creditors, Tsipras is still forced to
accept a third rescue package, despite strong opposition from Greece and
willingness to leave the Eurozone. Common Europe (Eurozone).
In addition, creditors are also forced to reach a budget surplus of 3.5% by
2018, and the same amount will be used.
Estimatedly, Greece's debt / GDP ratio is currently at 180% of GDP, which
means that the country remains one of the world's most indebted economies.
Meanwhile, the latest figures show that Greece's unemployment rate
remained high at 23.3% in April this year (the highest in the EU).
In many small cities, it is only possible to meet citizens over the age of 60 or
under 20. This shows that many working-age people have left the country and
are looking for opportunities in the background. Other European economy.
Anyway, Greece still has a bit of hope to hold on to. The country unexpectedly
reported GDP growth of 0.3% in the second quarter, well ahead of the 0.2%
decline expected by analysts. Greece also revised its first quarter economic

data, with a decline of just 0.1% from the previous 0.5%. However, the Greek
economy is still down 0.7% in the second quarter compared to the same
period last year.
In the capital, Athens, where hundreds of thousands of people took to the
streets protesting last year's harsh policies, the atmosphere was more
peaceful. Despite the high unemployment rate, tourism has shown positive
signs. Hotels and guest houses in popular tourist destinations still attract
international visitors. Workers in the travel industry feel more secure when
their jobs are guaranteed. Perhaps, this is one of the few areas where the
economic crisis has not yet reached.
XCIII.

Negative impacts on Greece’s economy, Eurozone.
XCV. Greece’s debt crisis was really the first public crack in the European Union’s
armor and one that has yet to be repaired
XCVI.
The Greek experience with austerity-linked financial support from
the EU has been painful and—making matters worse—rather ineffective. While
Greece is on the periphery, its problems are hardwired into the entire EU, and those
problems are spreading.
1. Impacts on Greece’s Economy
XCIV.

2009: The Greek crisis officially began in December 2009 when it
discovered a huge budget deficit of 12.7% of GDP, not 3.7% as the government
XCVII.


predecessor Father before that => This has raised fears among the creditors and
leaders of the Eurozone. By the spring of 2010, it was veering toward bankruptcy,

which threatened to set off a new financial crisis.
XCVIII.
2010: When the Greek debt crisis broke, Athens turned to the EU for help.
Assistance to Greece to this day has been contingent on Athens making domestically
unpopular reforms
XCIX.

C.
CI. 2015: After two bailouts have been released, the Greek economy is still very

bleak. Recently the meeting of creditors with Greece was not unified. The
government has no financial resources to pay back the debt. Banks must close. By
June 27, 500 of the country's 7,000 ATMs had no money left. People are really
pressing in this difficult situation because each person can only withdraw 60 euros
per day. The Greek travel industry has also encountered a number of issues, such as
the implications, for visitors to Greece who have no money to spend due to credit
cards being withdrawn by the Greek banking system.
CII.
2016: Nearly seven years, 13 austerity packages, and three bailouts (worth
a running total of $366 billion) later, the Greek economy is still struggling.
CIII.

The debt burden now registers at about 177 percent of GDP. Nonperforming loans total $119 billion, accounting for 45 percent of the country’s loans.
Unemployment is still around 23 percent, and about three-fourths of unemployed
people have been jobless for at least a year.
CIV.


CV.


CVI.
 Current situation
CVII. Greek GDP has started to grow, expanding by an estimated 0.4 per cent last

year, but it is on a very weak path. IMF economists expect the country to grow
at less than 1 per cent per year over the long-term, which is too low for it to
pay down its debts.

CVIII.

That means Greece’s “public debt remains highly unsustainable, despite
generous official relief already provided by its European partners,” the IMF
believes
CIX.


CX.
CXI.

At the moment, Greece's stay in or out of the Eurozone is a big question, and
it has a lot to do with it. But it can be clearly seen if Greece leaves the
Eurozone Greek currency will depreciate seriously and there is no guarantee
that the Greek economy will prosper again. Greek creditors will also face
significant losses.

CXII.
2. Impacts on EU’s Economy
CXIII.

Greece is a small economic base that can annually contribute about 2% to the

GDP of Europe. However, if Greece loses its ability to pay, the consequences
will spread throughout Europe and could trigger a large-scale debt crisis.

CXIV.

The EU faces a looming crisis which could threaten the sustainability of the
eurozone as the International Monetary Fund has warned Greece’s debts are
on an “explosive” path, despite years of attempted austerity and economic
reforms. The crisis started in 2009, when the world first realized Greece could
default on its debt. In three years, it escalated into the potential for sovereign
debt defaults from Portugal, Italy, Ireland, and Spain. The European Union, led
by Germany and France, struggled to support these members.

CXV.

CXVI.


CXVII. In the recent panic, major European countries such as Germany, Britain and

France were severely affected by the economy and modest recovery.
Therefore, these countries also have difficulty in saving Greece. If Greece does
not reach agreement on assistance, it may be forced to report the loss of
some debt. Therefore, it may be bound to the EU, which means that loans will
no longer be guaranteed by the European Central Bank (ECB).
CXVIII.

CXIX.
CXX.


What worries most European Union officials is that if Greece leaves the block,
this will create a domino effect. In fact, the EU has taken steps to separate
troubled financial institutions from other institutions.

CXXI.

CXXII. If Greece had to leave the EU, it might be time for Europe to recover more or

less. But congestion in the financial system in Europe is still possible, and
countries that have used emergency financial aid packages, such as Ireland
and Portugal, are likely to be dragged back into crisis.
CXXIII. In addition, Greece's exit from the EU could further aggravate the immigration
crisis in Europe, as it is no longer working with other EU countries to address
the problem. Currently Greece together with Italy are two European countries
must receive many immigrants from the Middle East and North Africa most.
CXXIV.
CXXV.
CXXVI. Greece’s current situation.
1. Expectations of the Greek


Following a defiant stance in early 2015, which resulted in closed banks,
capital controls, reversal of growth and exclusion from money markets, the present
radical left Greek government signed an onerous agreement. The agreement
provided Greece a new loan of €87 billion, yet required that Greece achieve a 3.5%
of GDP surplus (through more austerity) for a number of years. This target was
clearly not feasible, and the Bank of Greece proposed a surplus of 1.5% to 2% of GDP.
The IMF agreed with this target, and has asked the EU to restructure Greek debt
obligations consistent with this target as well as for implementation of structural
reforms that would make the Greek economy competitive. However, the EU has

insisted on the 3.5% surplus target and painted an unrealistically rosy picture of the
Greek economy to make this target appear feasible, while not pressing Greece on
reforms.
CXXVII.

The solution to the Greek crisis is obvious and has been obvious for some
time: make reforms, cut state expenditure, cut taxes, simplify investment procedures,
open markets to competition, and proceed with privatizations. The present Greek
government has failed in all of these dimensions.
CXXVIII.

CXXIX.
2. The current situation of the Greek

The euro area pressured Greece to resolve outstanding pension and labormarket issues with its bailout creditors, as the country missed yet another deadline
for unlocking funds this week.
CXXX.

The currency bloc’s finance ministers meeting in Brussels on Monday said
that the government of Alexis Tsipras has yet to comply with the terms attached to
the emergency loans that have kept the country afloat since 2010. The ministers’
Greek counterpart, Euclid Tsakalotos, will stay in Brussels through the week to
continue negotiations with representatives of creditor institutions, in a sign of
increasing urgency after months of talks failed to break the deadlock.
CXXXI.

“All the stakeholders emphasized today that we have to avoid delays,” EU
Economic Affairs Commissioner Pierre Moscovici told a news conference after the
meeting. “That would be very harmful. That would impair the confidence of investors
and consumers. That would be detrimental to economic recovery.”

CXXXII.

Greece is edging closer to a repeat of the 2015 drama that pushed
Europe’s most indebted state to the edge of economic collapse. A Greek government
official in Brussels declined Monday to say whether the country can meet debt
payments due this July.
CXXXIII.


The Greek government, which has more than 7 billion euros ($7.5 billion)
in bond payments due in July, has balked at implementing mandated reforms to its
energy and labor markets while also resisting calls for additional pension cuts. A
meeting between Finance Minister Tsakalotos and representatives of creditor
institutions before the Brussels meeting didn’t yield sufficient progress for bailout
auditors to agree to return to Athens and complete the review, according to an
official, who asked not to be named as negotiations aren’t public.
CXXXIV.

Greece’s creditors “must conclude in its review that the conditions are met
and they’re laid down precisely in the agreement,” German Finance Minister
Wolfgang Schaeuble told reporters before the meeting. “Apparently it’s still difficult
between the institutions and the Greek government to put the general agreement in
concrete terms.”
CXXXV.

Stalled bailout reviews and acrimony between successive governments and
auditors representing creditor institutions are all too familiar themes in the sevenyear crisis that has reduced the Greek economy by a quarter. And while discussions
continue on how to overhaul the labor market, a finance ministry official said in an
email to reporters on Friday that the issue can’t be solved in talks with technocrats.
CXXXVI.


Even as Greek bonds have performed better than most of their euro-area
peers this year on expectations that the government will capitulate, uncertainty has
weighed on economic activity, raising the risk that an additional bailout may be
needed. Unemployment rose in the last quarter of 2016, the economy unexpectedly
contracted, and a bleeding of deposits from the nation’s battered lenders resumed.
CXXXVII.

“The Greek recovery is once more significantly delayed by politics,” said
Nicholas Economides, a professor of economics at New York University’s Stern School
of Business. “Tsipras will blink at some point in time, the question is when.”
CXXXVIII.

CXXXIX.
CXL.

Conclusion:

CXLI.

The Greek government-debt crisis (also known as the Greek Depression) is
the sovereign debt crisis faced by Greece in the aftermath of the financial
crisis of 2007–08. The Greek crisis started in late 2009, triggered by the
turmoil of the Great Recession, structural weaknesses in the Greek economy,
and revelations that previous data on government debt levels and deficits had
been undercounted by the Greek government.

CXLII.

This led to a crisis of confidence, indicated by a widening of bond yield

spreads and rising cost of risk insurance on credit default swaps compared to


the other Eurozone countries, particularly Germany. The government enacted
12 rounds of tax increases, spending cuts, and reforms from 2010 to 2016,
which at times triggered local riots and nationwide protests. Despite these
efforts, the country required bailout loans in 2010, 2012, and 2015 from
the International Monetary Fund, Eurogroup, and European Central Bank, and
negotiated a 50% "haircut" on debt owed to private banks in 2011. After a
popular referendum which rejected further austerity measures required for
the third bailout, and after closure of banks across the country (which lasted
for several weeks), on June 30, 2015, Greece became the first developed
country to fail to make an IMF loan repayment.[10] At that time, debt levels
had reached €323bn or some €30,000 per capita.
CXLIII.