The Greek Crisis: Tragedy or Opportunity

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From a financial crisis to an economic crisis

According to the business dictionary, an economic crisis is:” A situation in which the economy of a country experiences a sudden downturn brought on by a financial crisis. An economy facing an economic crisis will most likely experience a failing GDP, a drying up of liquidity and rising/failing prices due to inflation/deflation”.

The financial crisis has had an important impact on the real economy of the European Union. Indeed, in 2009 the global gross domestic product has made a huge drop. And developed countries had suffered much more than emerged countries, such as Poland which represented the only member state with a positive growth.

Also, the unemployment rate has violently increased. For example, Spain had seen its unemployment rate passed for 8.1% in 2007 to 26.4% during the first quarter of 2013. This phenomenon can be explained by the necessary of setting up of austerity measures due to the financial crisis, which has required removing job inside the public sector.

3. What is the future of the European zone?

Business implications of the European crisis

In our globalized world of closely interdependent economies, the crisis affects almost every part of the world. Here the sovereign debt crisis and more especially the Greek crisis had definitively changed the European Union. According to Julian Knight, the Eurozone is a massive market for businesses from the United States, China, India, Japan, Russia and the other major world economic powers; that is why China, as International Monetary Fund (IMF) had lend money to the Eurozone’s rescue.

Despite the fact that this union is quite young compared to others, it remains essential to protect it. Help the European Union allows preserving the Eurozone’s massive consumer market. Indeed, around 322 million of people use the Euro every day in order to buy good and services. Therefore, if there was a collapse in its value, they would be less able to buy imports. Moreover, it permits to prevent a global recession. Finally, it allows protecting the world financial system. Indeed, banks around the world have invested in the government debt of Eurozone countries. By this way, they also have an important amount of Euro, so to avoid a loss of money value, which would penalize all the countries, it seems preferable to maintain the Eurozone safe

European Union, a bad start

In 1992 the EC members, numbering twelve, signed the Maastricht treaty forming a more comprehensive European Union (EU) and calling for a common currency. However, I think that there was a bad organization from the beginning. Indeed, the fact that countries can falsify data such as Greece did it in order to join the European Union, or United Kingdom, and especially England which accept to join the Union but with some conditions seems unfair and stupid. Indeed, faced to the European unification, England understood that it might be wise to be part of its adhesion in order to not be isolated and take part of the “common market”. However, since its entry, England has never stopped to make its own rules, such as Margaret thatcher did with its blackmail: “I want my money back”. Therefore, for me these examples are showing a lack of credibility.

Here, the ongoing European crisis has provided daily evidence that monetary union cannot work without a fiscal union. Indeed, it will allow managing the European Union economy as a whole. Moreover, we know that in 1990, around ten European nations made part of the biggest economy, whereas by 2050 only two nations will be part of the most powerful economies. By this way, it remains essential to install a closer economic union.

The Brexit and Grexit

According to Investopedia, Brexit is an abbreviation of "British exit", which refers to the June 23, 2016 referendum by British voters to exit the European Union. Here, it was the first time that the European Union was losing a member: The United Kingdom; fifth largest economy in the world. Indeed, 43 years after its adhesion, the country is leaving the European Union with 51.9% of votes during the referendum. This announcement has troubled global markets, including currencies, causing the British pound to fall to its lowest level in decades. Therefore, we can ask ourselves whether the departure of the United Kingdom is not going to dive the Eurozone into a financial crisis.

By the way, for the Greece it is different because of the situation and the lack of evolution strengthens the left Radical Party "Syriza” which gains the elections legislative of January, 2015. New Prime Minister announces while he is going to renegotiate with the various creditors of the country.

So in June 2015, Greece was officially in default of payment and the consequences were direct with the close of banks. The Price Minister settled a referendum

Recommendations

To me, Greece should never have been part of Europe has it is a country not enough stable.

Anyway, they should cha,ge their managing methods because their economy is really bad and not going well. So Europe should try to find out a solution allowing Greese to create values.

They should also stop making the country going deeper in the bad way, European decision makers and Greece should really work together to find a solution to solve some problems. For example making easier the economic system. Greece could be good, and they should play more with the toursim as since 1 year, their is less and less people goind to Marocco, Turkey because of wars, sot hey should jump on this occasion to make profit.

References

Business Dictionary, (2013). Definition of economic crisis. Retrieved from: www.businessdictionary.col/definition/economic-crisis.htlm

Davis Andrew, (May 9, 2011). Greek debt rating cut to B by S&P on restructuring concerns. Retrieved from: http://www.bloomberg.com/news/articles/2011-0509/greece-s-credit-rating-is-cut-to-b-from-bb-by-s-p-may-be-reduced-further

Duca John, (November 22, 2013). Subprime mortgage crisis. Retrieved from: www.federalreservehistory.org/Events/DetailView/55

European Commission press release IP/00/422, (May 3, 2000). “Commission proposes Greece to become the twelfth member of the euro-zone”. Retrieved from: http://europa.eu/rapid/press-release_IP-00-422_en.htm

Eurostat,