This is not only with Greece, but also with a few other European union countries. These nations became popular by the name PIIGS (Portugal, Italy, Ireland, Greece and Spain).
Greece is in deep blue sea. They are in a very horrible situation. But this is not the case with the other nations. They still have a good chance of coming back to safe shores.
Is there's a way out? If yes, what is it?
Let's see now.
The measures applied on Greece can be broadly classified into following:
1. Bailout Package.
2. Rescue Package.
3. European Stability Mechanism.
4. Measure by the European Commercial Bank.
5. Country’s own measures – Austerity Measures.
Bailout Package - 80 Billion Euros were collected by the EU nations. This is the first bailout package. One has to remember that this is a form of loan and not a gift. So Greece has to pay back this loan along with interest. Only factor that is helping out is the interest rates are quite less and it is a long term loan.
Rescue Package: This is the most desperate measure taken by the EU to bailout the PIIGS. This was 7 times bigger than the earlier package discussed. This is also a loan like the bailout package and has to be repaid within 3 years. This comes with a promise from the nations that they will be much more responsible in the future.
ESM: This a 500 Billion Euro mechanism that will be sponsored by the European Union countries. Currently it is holding 80 Billion Euros but in the future another 420 Billion Euros will be brought in and will be used to bailout countries which will show financial weakness.
ECB Measures: The bonds that the government was issuing are reduced to a Junk status now. No individual , company, bank or country is interested to buy the bonds of these countries which once used to be the most sought after ones. There is only one bank that could help Greece and that is the ECB. At the time EU was formed ECB had certain conditions which the member nations must follow, if the same is not followed no funds of the ECB shall be released to these nations. Greece had clearly submitted falsified certificates to ECB on account of which ECB should not have given then anymore funds. But seeing this as a very exceptional situation and considering its effect on other nations ECB had to provide funds.
Last comes the country’s own measures. Any measures that is applied by the country to come out of this crisis is called as the Austerity Measures. These are the only measures that are not in the form of a debt. Hence will be most used ones. It includes privatization, globalization, increasing tax rates, decreasing subsidies, reducing military and medical expenditures, reducing social security benefits and so on.
Whatever may be the measures used to get rid of this crisis but it always leaves a gap. The financial crater will worsen with the times to come. There are wide spread riots happening in Greece to reduce the harsh austerity measures.
But don’t you think it is the responsibility of each and every citizen of Greece to standup accept these measure to come out of the crisis. Greece is the smallest nation facing the crisis in the EU. If Greece crisis has created such a turbulence then what will happen if the bigger nations start to collapse. Are we seeing an end of Euro? These are certain questions that has only one answer “WAIT AND WATCH”