Assignment

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GREECE DEBT CRISIS
Greece is one of the country that suffered in economy of Europe which can drag down another countries into this crisis. If the problem still can’t be solved, it will affect the economy of Europe and even Malaysia is not an exception. Greece is in critical condition which in the vicious cycle of bankruptcy, low competition in market and economy which is worsen.
GDP
The problem occurred because of weak management of the economy, the corruption, fraud, and over spending which caused the government debt rise until 113%. Deficits of government spending are 13.6% from the GDP in 2009. It is predicted that Greece debt will increase 200% from GDP. Status financial in the public sector has become critical which the government can’t afford to pay the salaries of the public sector. The GDP in 2011 is predicted to decrease in 6.3% and it will predicted to continue decreasing in 2012 at 5.9%. The unemployment rate is increasing at 17%.
BOND
Huge debt of Greece which cost US$400 billion been paid by the banks of France, United Kingdom, United States of America, German, and local banks from the sale of bond Greece government. Unfortunately, the debt is too huge and government doesn’t have enough money because of economic crisis caused by weakness of the Europe economic. It caused many people afraid that Greece will fail to pay its bond. If this happened, the financial system will weaken and collapse. The banks will have huge amount of losses and unexpectedly make the society lost their trust. If the bank goes bankrupt, the government will have to take over the bank which will cause a huge amount of money to spend in order to save the bank. If Greece can’t pay its debt, it is possible that Italy, Portugal, Ireland, Spain which has a huge amount of debt may fail to pay their debt too. Finally, banks in Europe which hold the Greece bond and other countries will bankrupts which will cause jeopardy to the bank system of Europe and our world.
FINANCIAL AID
The European Union (EU), European Central Bank (ECB) and International Monetary Fund (IMF) agreed on May 2010 with the Greek government to a three-year financial aid programme. They have agreed to gift €110 billion but it seems the first loan is not enough and EU help Greece for the second time which have put huge amount of money which cost €109 billion in July 2011. The loan given which hope that, the government takes the serious step to spend it wisely.
PEOPLE
In order to increase the government yield, they have to increase the taxes, cut the employee salaries, imposed and introduce a new tax and change the government projects into private projects. Unfortunately, the people don’t agree with this because it is too over for them. The workers and the government employees don’t satisfy with the situation and caused riot and vandalisms which showed their dissatisfactions, angriness and frustration towards the government. EU and IMF looked that the programme didn’t worked well caused the programme doesn’t followed the schedule. They urged Greece to take serious steps if they want loan the money but Prime Minister of Greece George Papandreou find it difficult to follow because the programme doesn’t get any support from his people in fact he was opposed by them. Consequences from that event, the economics of Greece continue decreasing because of the market doesn’t believe that the economy will be back to normal.
POLITICAL PARTIES
Greece is not only struggled with its economic issues but also its political issues which from the first round of election both major parties fail to get the majority of votes in parliaments which obviously shows that Greece can’t save its debt crisis. There is a party which deny the help from EU and IMF. Syariza party is not only rejecting the injection of capital from EU and IMF but they also reject euro money. If the societies choose wrongly, it will caused more catastrophe for Greece economy. Furthermore, economy crisis and political issues is related. The election will demonstrate the stability of the economy which shows either Greece continuing on using euro or not. If they reject the using of euro, it will caused the decreasing in salaries per capital at 55% and 65% decreasing in value if they use a new money to replace the euro. It is predicted that the unemployment rate is increasing by 34%. But because they reject Syariza, they are choosing euro even though they know they have to face with the salaries cutting, high tax and unemployment to save Greece from bankcrupcy.