Greek Crisis

The Greek Crisis:

A Tragedy or Opportunity

BA 201 – Macroeconomic Analysis

Prof. Joel C. Yu

The Greek Crisis: A Tragedy or Opportunity

I. Introduction

The year 2008 left a grave mark in the global financial system as the world experienced one of the worst financial meltdown in history that shocked many of the players in the global economy. The European region was severely affected by this meltdown as it went under recession and Greece was one of those who did not escape from this. By year 2010, a more gloomy future threatened Greece as it assumed a central role in debates around the globe when its sovereign debt problem burst out leading to what we call now as the Greek Debt Crisis. This intense global reaction on Greece may be surprising but it only stresses the complexity of the immense ramification of its present dire situation and the interconnectedness of the world economic system. At present, it is still uncertain as to what will happen but it is definitely clear that Greece has a long way to go before its problem will be completely resolved and its repercussions illustrates the unstable state in which the Eurozone finds itself. Further, examining the experience of the Greek economy can show the relation of an economy and its social and political structure, the effect of financial market on a country’s economic development, and the effects of single currency union.

II. The Story of the Greek Crisis

After Greece has experienced a long period of economic crisis in the 1980’s and early 1990’s, its economy has started to manage a sustained growth in 1994 that only ended with global financial crisis in 2008. As narrated by Karamessini in her paper[1], during the period of 1994-2007, its GDP average growth rate was at 3.7% that put Greece as the fastest growing economy in the euro area due to high rates of investment and productivity growth. Further, this GDP growth and private capital accumulation...