Tragedy of Greece – Could it be Any Worse?

By on February 10, 2012 in economics

greece

  • In 2011, Greek Manufacturing output fell 15.5%
  • Unemployment currently stands at 20.9%
  • Greek youth unemployment stands at 48% – surpassing even Spain’s youth unemployment
  • Government debt burden stands at 160% of GDP. Despite all the austerity measures, the Greek budget deficit has not fallen because the economy is shrinking so quickly.
  • On top of this collapsing economy, Greece is under pressure to pursue a raft of further spending cuts, pension reforms and public sector job losses. It’s a vicious cycle without an end.
  • VAT revenue fell 18% in 2011. Simply because 60,000 business and small business have gone bankrupt since the summer.

Current Account Imbalances remain

Despite wage cuts, e.g. 20% cut in Minimum wage, Greece remains fundamentally uncompetitive and is unable to reduce its current account deficit.

Would leaving the Euro really be so bad for Greece?

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3 Responses to Tragedy of Greece – Could it be Any Worse?

  1. SCEcom February 27, 2012 at 12:32 am #

    Great and informative post indeed ! Keep up your good work man !
    Greece should be allowed to leave the Euro and default, before the high-debt European countries demand billions more cash.

    Reply
  2. Tim Rees February 13, 2012 at 1:25 pm #

    What ever happened to the Iceland Bank debt? Wasn’t that the first country to walk away from not paying

    Reply

Trackbacks/Pingbacks

  1. Financial Implosion | Economics Blog - November 21, 2012

    [...] Austerity policies. As a consequence of a sovereign debt crisis, the government would be forced to cut government spending rapidly and or increase taxes. This would lead to unemployment and a fall in aggregate demand. Therefore, it could push the economy into recession – making the government’s budget position worse (due to falling tax revenues). To a large extent, Eurozone economies are facing this kind of deflationary debt spiral – efforts to slash budget deficits are causing a rapid fall in economic growth. In  a country like Greece, there is a strong element of economic implosion – policies to deal with the crisis are only making it worse – it is hard to see a way out. (tragedy of Greece) [...]

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