Greek debt crisis guide: Q&A to understand Greek situation

Here we talked about different issues of Greek crisis: European and IMF aid, George Papandreou (PM minister of Greece) actions.... but we know how all started? Why is important the downgrade made by S&P? If you're a bit confused, don't panic, here's the Greek Guide:

• What's wrong with Greek economy?

Greek government owes (officially) €300bn to their investors, and they keep losing money, day by day.

• Why is the debt so high?

Irresponsible spending actions, mainly. But also, Greek government lied about their debt, with help of Goldman Sachs to mask it . Now, they can't finance the normal administration spending and must correct a debt of 13% of their GDP (Also, an indicator of the economic health of a country) that burdens the, already, weak economy of Greece.

• When became public this problem?

19 May, when Greek government should paid a €900bn loan. As they were unable to pay it, Greece politicians asked for an international rescue package

• Rescue package? Who'll lend money to Greece? How much? Why?

Eurozone states members committed to aid Greece with €30bn. Also, IMF is negotiating his part, between €10-15bn. This would give a sense of stability to Greek investors, also is a 'duty' to back other's back for European members.

• Which are the terms of Greek rescue package?

European union members will lent money to Greek at an interest of 5%, and should be paid in 3 years. Germany, wanting to expel Greece from Eurozone, wants to harden these numbers. Saving Greek economy is save Euro, so all European countries should make and effort and coordinate their steps, if not, all Europe will fall.

• Will be enough with European-IMF rescue package?

€30 bn...or €40-45 bn if IMF finally helps too, may be not enough, as other voices say that Greece could need a €150 bn bailout

• What's doing Greece to improve the situation?

New Greek government inherited a hard situation. To improve the situation, Greek government has started a hard line way to reduce spending. Such action as:

• Increasing some taxes (Gasoline, drinks, Tobacco)
• Increase retirement to 67 years
• Harden tax evasion
• Reduce government administration spending

• That's enough?

The measures package is not much popular, so trade unions and opposition are attacking the government actions, marching at demonstrations, etc. That isn't helping the situation, so there's not a 'national pact' and every side is working against other, not sticking up.

• How serious is this situation?

These are the worst time of the Euro since his creation, and is threatening the existence of Euro currency.

• Could this affect other countries?

Could affect and is affecting them, right now, to other weak economies such as Portugal and Spain (who were downgraded 2 points, by S&P)

Related articles:

Investors snap up Greek T-bills

German parties wants Greece out of the eurozone. Bad times for Greek government

Greek economy rated junk by S&P

Wanna know why is impossible to save Greece?

Greece Crisis. Greece ask for €45 bn in help from EU and IMF

Greek bailout arrives: Are €110 bn enough or would you like some more?

Greece crisis: Further reading

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