With Economic Options Running Out, Greece Faces Deepening Crisis

Greece must reduce government spending by $15 billion next month or it will be suspended from receiving international loans that keep the country afloat. This will be especially challenging since the May 6th elections there resulted in pro-bailout parties no longer having the power needed to govern the country. The people have spoken, and it appears most of them do not favor the austerity measures demanded by other members of the euro-zone.

If Greece fails to decrease its spending by $15 billion next month it will have to find some way other than a pan-European bailout to close the gap between government tax receipts and spending commitments. This may result in exiting the European Union and returning to its own currency, the drachma. While some believe that a decrease in spending may “help” Greece by preventing default on its debt and continuing access to international loans, the real help Greece needs is an increase in revenue to support itself by restructuring business and foreign investment.

Between the years of 2009- 2012 the Greek unemployment rate doubled from 10% to 20%. It does not take an economic expert to realize that lack of employment, business and foreign investment leads to reduced revenue in a country. Not only is a decrease in government spending needed in Greece, but what is also needed are jobs for citizens to work and provide for themselves and their families and to be able to pay back the money they owe. How long does the European Union believe countries like Greece will be able to sustain themselves when austerity measures force economies into a job-destroying depression?

The economic state of Greece has motivated many citizens to flee the country to find jobs, go to school and begin a life in another country. A nation loses hope when its educated youth, the future of any country, are fleeing their homeland to start life over in another land. Spending and borrowing is destroying a civilization that has been around since about 3000 B.C. Major parcels of land have been sold to ameliorate harsh economic conditions, including the port of Piraeus which went to China for $4.6 billion in the summer of 2011. Louka Katseli, a former Greek economy minister stated that the austerity program “is suicidal, not only for Greece but for the euro.” She explains that the same mistakes are being made in Spain, Portugal, and Italy.

Countries that are faced with spending cuts and borrowing to support their people need to think of innovative ways to restructure business and foreign investment to increase internal revenue. Borrowing and bailing out countries is merely slapping a band-aid over a deep wound requiring major surgery. The root causes of Greece’s current economic state include political corruption, a high influx of destitute immigrants in the past two decades, an inflated public sector and rampant tax evasion. Once solutions are found to cure the root causes of Greece’s economic problem, and are not just being covered up by decreasing spending and borrowing funds, the country can slowly begin to repair itself.

For now, we will just have to wait and see if Greece can successfully decrease spending by $15 billion next month or will have to begin printing its own money to survive as a nation.