A Thorough Examination of the Greek Debt Crisis: From Boom to Bust; Walking Through the Valley of Ashes

Kobe Peery Modern World History Elizabeth Siarny June 8, 2015

Greece’s Economic Crisis: What Were The Causes of Such Significant Debt?

As of May 2015, Greece has been charged with the task of returning over €339 billion (~ $383

billion) to the European Union (EU) and the International Monetary Fund (IMF). At this juncture, 1

Greece’s defaulting on its debt is almost inevitable and as a result, Europe is facing serious economic and

governmental issues; this essay aims to focus on the historical precedents leading to Greece’s economic

failures and the possible effects it could have on the future of the Eurozone. As a result of Greece’s

governmental mismanagement pertaining to its economy since its development of a modern economy

from roughly 1929, it currently faces serious consequences. Greece, having once been an economically

thriving nation, finds itself in ruins, arising the question: what factors contributed to Greece’s transition

from boom to bust?

Greece’s economic issues began with their establishment of a modern economy, arguably marked

by their development of the Agricultural Bank in 1929. The intent of the Agricultural Bank was to

stimulate modernization through the implementation of programs aimed at improving economy through

the financing of economic and agricultural sectors throughout Greece. However, despite Greece’s 2

success of developing the Agricultural Bank (ATEBank as it is known now), the Great Depression of

1932 held substantial effects on Greece’s economy, most significantly leading to the depreciation of the

drachma and the need for the expansion of their domestic production industries, later becoming one of

Greece’s primary sources of revenue. Other effects that the Great Depression held on Greece was a 3

default on their economic obligations, a decrease in wages, and the abandonment of the gold standard

1 http://www.nationaldebtclocks.org/debtclock/greece 2 Stathis N. Kalyvas, Modern Greece: What Everyone Needs to Know (New York: Oxford University Press, 2015) 3 Ibid

currency. The intent of the gold standard currency was governmental assurance that any and all 4

investments made on part of the people, would be worth its value in gold, literally. At this time, for each

drachma that one person was owed by the government, they held that same value in gold, so as to assure

that one’s loans would be paid in full. However, as the drachma was continually produced, the 5

government no longer had enough gold to match each drachma that had ever been produced, leading to

the abolition of the gold standard currency. Without the gold standard currency to provide assurance, 6

people needed to rely entirely on their faith in the Greek government to repay their loans. But this faith 7

was undermined by Greece’s extensive history of defaulting on their debt, as they did in 1826, 1843,

1860, 1894, and again in 1932. One examination showed that a total of approximately 50% of Greece’s 8

years since 1800 had been spent avoiding repayments. As a result of their atrocious economic history, 9

Greece could provide little comfort for those who were skeptical of Greece’s stability, seemingly doomed

to repeat history once again in the future. With people needing full assurance of the security of their

investments in the government and Greece having been unable to provide those investors with such

assurance, interest rates on borrowing increased to the point that Greek economy could no longer support

its people. This all culminated in a collective loss of faith in Greece’s economic stability and the 10

drachma, leading to a widespread urge for conversion of assets into another currency, in fear that the

drachma would be unable to retain its value. Greek citizens’ conversion of their drachma into other, less 11

risky currencies resulted in a massive devaluation of the drachma, culminating in Greek hyperinflation. 12

Despite the Great Depression being Greece’s first major modern economic failure, in the long run, it

4 Ibid 5 Brian Peery, Portfolio Manager at Hennessy Funds 6 George Karatzas, The Greek Hyperinflation and Stabilization of 1943­1946: A Comment on Makinen 7 Ibid 8 Eric Fox, “History of Greek Sovereign Debt Defaults,” Investopedia, 19 September 2011, <http://www.investopedia.com/financial­edge/0911/the­history­of­greek­sovereign­debt­defaults.aspx> 9 Matthew Lynn, “Greek Economics: Drachmas, Debt, and Dionysus,” HistoryToday, 8 August 2011, <http://www.historytoday.com/matthew­lynn/greek­economics­drachmas­debt­and­dionysius> 10 Brian Peery, Portfolio Manager at Hennessy Funds 11 Ibid 12 George Karatzas, The Greek Hyperinflation and Stabilization of 1943­1946: A Comment on Makinen

helped shape Greece for the better as it brought them to establish import/export services as a primary

generator of income. 13

Greece’s joining of the European Economic Community (EEC) in 1980 was driven more by

political rather than economical reasons. Political incentives to join the EEC included governmental

stability, security, and democratic consolidation as a result of internal and external conflicts of war

placing pressure on the strength of Greece’s government and unity. However, Greece’s joining of the 1415

EEC held immediate economic effects, resulting in less economic protection of Greece’s industries and a

significant expansion of their informal sector. The informal sector of a country is considered the “grey 16

area,” and is not taxed nor monitored by the government; the informal sector is also commonly­known as

the “black market”. Greece saw an 11% expansion of their informal sector (from 20% to 31% of GDP) 17

between the 1970’s to 1988 as a result of their joining of the EEC. Despite the great economic 18

disadvantages that Greece experienced, their joining of the EEC provided great political benefit, most

significantly granting political stability.

The signing of the Maastricht Treaty in 1992 ultimately marked the creation of the European

Union (EU). One of the main goals of the creation of the EU was to unite European nations with a 19

common exchange rate and a single interest rate, which they did through the establishment of the Euro on

January 1, 1999. But with the implementation of a new system of currency, there came the necessity for 20

the establishing of standards and requirements, so as to prevent any economic disasters. These standards

were named the Maastricht Convergence Criteria, and had 5 requirements that were considered necessary

13 Stathis N. Kalyvas, Modern Greece: What Everyone Needs to Know (New York: Oxford University Press, 2015) 14 Ibid 15 “The Greek Civil War,” Cold War Museum, <http://www.coldwar.org/articles/40s/GreekCivilWar1945­1949.asp> 16 Ibid 17 “Informal Sector,” Wikipedia, <http://en.wikipedia.org/wiki/Informal_sector> 18 Stathis N. Kalyvas, Modern Greece: What Everyone Needs to Know (New York: Oxford University Press, 2015) 19 Matthew J. Gabel, “European Union (EU),” <http://www.britannica.com/EBchecked/topic/196399/European­Union­EU/224464/The­Maastricht­Treaty> 20 Ibid

in order to adopt the Euro. It wasn’t until after Greece had passed their Euro entrance exam and 21

implemented it as their common currency that they were discovered to have cheated, and were in

violation of two prerequisites mandated in the criteria. One requirement stated that the nation applying 22

for the Euro must have a budget deficit that does not exceed 3% of the gross domestic product (GDP). 23

Despite initially claiming that their budget deficit was no more than 1% of the GDP, Greece avoided

expulsion from the Eurozone after admitting that they were well over 3%. By 2009, they reported a

budget deficit to GDP of 12.5%, more than four times the EU benchmark for entry. Also required for 24

entry into the Eurozone was a debt to GDP ratio of no greater than 60%. When converting to the Euro, 25

Greece had a debt to GDP of 103.7%; they currently stand at 171.4%, almost three times the limit set by

the Maastricht Convergence Criteria. As revealed after their acceptance into the Euro, Greece was far 2627

from meeting the necessary requirements established by the EU. Greece’s incentivisation to merge with

the Euro in 2001 was for economic purposes, such as gaining monetary stability and thus, having the

ability to borrow at lower interest rates. Contrary to many beliefs at the time, having access to lower 28

interest rates later posed an issue: it encouraged Greece to borrow more than it could pay back, a problem

they had previously been combating. 29

Like many nations, Greece used borrowing as a means of stabilizing their economy. Only in

Greece, the recession of 2008 made borrowing a more difficult task as tax revenues declined and their

economic struggle during a period of mass borrowing, resulted in Greece being unable to pay back much

21 Ibid 22 Nick Thompson, “Timeline: Greece’s Financial Crisis,” CNN, 1 November 2011, <http://www.cnn.com/2011/WORLD/europe/06/23/greece.crisis.timeline/> 23 Ibid 24 Ibid 25 “In Graphics: Eurozone Crisis,” BBC News, 25 April 2013, <http://www.bbc.com/news/business­13361930> 26 Ibid 27 Daphne Tsagari, “Greece’s Public Debt Stands at 171.4% of GDP,” GreekReporter, 22 July 2014, <http://greece.greekreporter.com/2014/07/22/greeces­public­debt­stands­at­174­1­of­gdp/> 28 Serdar Ötzür, “The Greek Debt Crisis: Causes, Timeline, and Bailout Programs,” <https://www.academia.edu/8272839/The_Greek_debt_crisis_Causes_Timeline_and_Bailout_Programs> 29 Ibid

of what they were loaned, culminating in the loss of faith of many, concerning Greece’s ability to repay

their loans and thus, increasing Greece’s interest rates. Their decline in tax revenues was not helped by 30

the fact that Greece was and is notorious for its inability to fully collect on taxes due to widespread

understating of income by the people. In order to evade taxes, an overwhelming amount of Greece’s 31

population declare income much lower than what they actually make. One examination of Greece’s

annual tax collection estimated that those who are self­employed avoided a minimum of approximately

€28 billion in misrepresentation of their income in 2009. That €28 billion would have been able to pay 32

off 31% of the Greek budget deficit that year. 33

Another source of debt that has been identified was Greece’s hosting of the Olympics. The 2004

Olympics were held in Greece’s own Athens. At the time, Greece had already been experiencing 34

economic struggles, which was worsened as the Olympics was substantially more costly than had been

expected. At the conclusion of the Olympics, Greece had expended a total of roughly €9 billion (~ $11

billion), double what their original estimate was, further worsening the government’s budget deficit that

had already been in violation of the limits set by the European Union (EU) in the Maastricht Treaty. 35

Greece, as a result of their lack of anticipation of the costliness of hosting the Olympics, had warned the

EU that their figures would be worse than projected; and they were. Greece’s finalized numbers were

devastating: the deficit to GDP was 6.1%, more than double what EU regulations allow, while their total

debt reached the highest in the EU at the time at 110.6% of their GDP. As a result of their horrendous 36

30 Brian Peery, Portfolio Manager at Hennessy Funds 31 A.P., “Tax Evasion in Greece: In Flagrante,” Economist, 4 September 2012, <http://www.economist.com/blogs/freeexchange/2012/09/tax­evasion­greece> 32 Ibid 33 Ibid 34 Nick Malkoutzis, “How the 2004 Olympics Triggered Greece’s Decline,” Bloomberg Business, 2 August 2012, <http://www.bloomberg.com/bw/articles/2012­08­02/how­the­2004­olympics­triggered­greeces­decline> 35 Nick Thompson, “Timeline: Greece’s Financial Crisis,” CNN, 1 November 2011, <http://www.cnn.com/2011/WORLD/europe/06/23/greece.crisis.timeline/> 36 Nick Malkoutzis, “How the 2004 Olympics Triggered Greece’s Decline,” Bloomberg Business, 2 August 2012, <http://www.bloomberg.com/bw/articles/2012­08­02/how­the­2004­olympics­triggered­greeces­decline>

economic failure that year, Greece officially became the first nation in the EU to be placed under fiscal

monitoring as a means of attempting to limit any possible future economic decline. 37

Since their entrance into the Euro, Greece’s economy hadn’t been entirely riddled with economic

failures. In fact, Greece was actually a source of great economic success during 2008. With that in mind, 38

how is it that they fell to such economic ruins, how did Greece go from economic boom to bust? Towards

the beginning of 2008, Greece could be seen to be thriving economically, but their success did not last.

With a GDP growth rate of 4%, Greece was ranked as one of the 40 richest nations in the world, and

ranked 26th overall highest Human Development Index (HDI), which seeks to measure the quality of life

within a country. Greece’s Debt to GDP from 2006 to 2008 was approximately 100% which, despite 39

still being above the limit established by the Maastricht Treaty, was significantly lower than the proximal

years. 40

After having “thrived” from 2006 to 2008, Greece quickly went from economic boom to bust.

Two primary driving causes of this abrupt economic turmoil were Greece’s excessive expenditure on

public services and infrastructure, and their “lack of a sophisticated and competitive business sector”. 41

Greece’s public spending rose to an alarming 90% of their total revenue, limiting the availability of funds

for investment and payments towards debt and interest. Greece’s excessive spending was not helped by 42

the fact that their revenues had also been declining. In 2009, Greece’s % revenue to GDP dropped from

34.2% in 2008 to 32.8%, while their tax revenues had declined by about €4 million (~ 5% of total tax

collection). However, despite Greece’s governmental mismanagements, certain triggers of Greece’s 43

37 Ibid 38 Stathis N. Kalyvas, Modern Greece: What Everyone Needs to Know (New York: Oxford University Press, 2015) 39 Ibid 40 Michael Mitsopoulos and Theodore Pelagidis, Understanding the Crisis in Greece: From Boom to Bust, (New York: Pelgrave Macmillan, 2011) 41 Stathis N. Kalyvas, Modern Greece: What Everyone Needs to Know (New York: Oxford University Press, 2015) 42 Ibid 43 “Tax Revenue Statistics ­ Government Revenue from Taxes and Social Contributions,” Europa, <http://ec.europa.eu/eurostat/statistics­explained/index.php/Tax_revenue_statistics_­_government_revenue_from_taxes_and_social_contributions>

current financial situation were a result of the economies of other nations. One significant event that

Greece had no control over was the 2008 US stock market crash. As the US is and was a major 44

international economic power, their affairs often affect other nations. The crashing of the market did not

solely affect Greece, but it certainly did have a significant impact, hurting the Greek economy. As told by

economist Roger Farmer, “When a small event occurs in one market, it causes a loss of confidence in

other markets as people panic. They all jump out the window together.” From 2008 to 2009, Greece was 45

most definitely struggling; however, they were struggling much worse than anyone thought they were as a

result of their publication of falsified statements. In a state of turmoil, Greece could no longer quietly

struggle and feign stability. In 2009, they finally revealed that they had been falsifying their economic

reports, and were indeed, in exceedingly heavy debt. Greece initially reported to have a deficit forecast 46

from 3.7% of GDP, just slightly over the 3% benchmark as established by the EU in the Maastricht

Treaty. Despite being in violation of the Maastricht Treaty, Greece’s 3.7% was much more appealing 47

than was their true debt. When finally admitting that they had published inaccurate fiscal statistics, Greece

revealed that their true % budget deficit to GDP was approaching 12.5%, about four times what they

originally claimed. Still yet, after their numbers had been finalized, Greece displayed a deficit to GDP of 48

15.6%, about five times what they initially asserted. Greece’s abuse of trust and demonstration of their

incompetency to manage their own economy certainly had ramifications, playing a significant role in the

EU’s decision to impose “austerity measures” in conjunction with Greece’s first multi­billion euro loan.49

One incentive for the EU and the IMF to approve Greece for such significant economic assistance was 50

44 Liz Alderman, “Explaining the Greek Debt Crisis,” NY Times, 8 April 2015, <http://www.nytimes.com/2015/04/09/business/international/explaining­the­greek­debt­crisis.html?_r=1> 45 Roger Farmer, Professor of Economics at UCLA 46 Stathis N. Kalyvas, Modern Greece: What Everyone Needs to Know (New York: Oxford University Press, 2015) 47 Nick Thompson, “Timeline: Greece’s Financial Crisis,” CNN, 1 November 2011, <http://www.cnn.com/2011/WORLD/europe/06/23/greece.crisis.timeline/> 48 Ibid 49 “Greek National Reforms Programme,” Europa, April 2014, <http://ec.europa.eu/europe2020/pdf/csr2014/nrp2014_greece_en.pdf> 50 Brian Peery, Portfolio Manager at Hennessy Funds

the concept of “political clientelism”. Clientelism is defined as “a social order that depends upon 51

relations of patronage; in particular, a political approach that emphasizes or exploits such relations”. In 52

simplified terms: in exchanged for economic favors, the parties that provided assistance to Greece would

as a result, have a say in Greek affairs, allowing them to thus use Greece as a tool for economic

stimulation throughout the EU. 53

It was from this point on that Greece had started receiving heavy economic support. Edging on

bankruptcy and threatening to disrupt the European economy, the International Monetary Fund (IMF), the

European Central Bank (ECB) and the European Commission (EC) approved Greece’s first multibillion

dollar loan. Totalling €110 billion (~ $121 billion), €80 billion of these funds were provided by the EU,

while the rest came out of the IMF. This loan, however, came with contingencies, known as the 54

“austerity measures”. These austerity measures mandated that Greece impose significant budget cuts,

steep tax increases, have less resistance to dominant governmental forces, end tax evasion, and allow for

more business affairs to take place in Greece. Despite the implementation of these austerity measures, 55

Greece has served as an indication that conservation of money through cut­backs is not always an answer;

the Globe and Mail provides explanation as to why: “The economy is shrinking faster than Athens can cut

spending or raise revenues. The more Athens cuts, the more the economy contracts. It’s a vicious circle.”

Greece continued to struggle economically, leading them to later take out a second multi­billion euro 56

loan in March of 2012. The EC and IMF approved Greece for a total €130 billion (~ $143 billion) loan, 57

51 Serdar Ötzür, “The Greek Debt Crisis: Causes, Timeline, and Bailout Programs,” <https://www.academia.edu/8272839/The_Greek_debt_crisis_Causes_Timeline_and_Bailout_Programs> 52 Oxford English Dictionary 53 Brian Peery, Portfolio Manager at Hennessy Funds 54 “Eurozone Approves Massive Greece Bail­Out,” BBC News, 2 May 2010, <http://news.bbc.co.uk/2/hi/business/8656649.stm> 55 “Europe’s Greek Lesson: Austerity Has Failed,” The Globe and Mail, 30 January 2015, <http://www.theglobeandmail.com/globe­debate/editorials/europes­greek­lesson­austerity­has­failed/article22719860/> 56 Ibid 57 Nick Thompson, “Timeline: Greece’s Financial Crisis,” CNN, 1 November 2011, <http://www.cnn.com/2011/WORLD/europe/06/23/greece.crisis.timeline/>

€100 billion of this coming in the form of direct assistance, whereas the other €30 billion served as a

guarantee for new bonds for private sector creditors. The reason why private sector investors received 58

such a high payout was a result of their acceptance of approximately 70% in losses of their government

bonds. When a government needs money, they often issue bonds as a form of investment, which in this 59

instance, was widely purchased by private sector investors. When the Greek economy began to collapse, 60

havoc spurred and investors sought to sell back their bonds before the value was worthless, willing to

accept their losses. However, at the time, Greece was heavily indebted and did not have the availability 61

of funds to buy out the investors, cumulating in even more debt. Being loaned a grand total of €240

billion (~ $264 billion) certainly held temporary, short­term benefits, but in the long run, Greece became

further indebted, owing money to the IMF, EC, and ECB. This was partially as a result of Greece’s failure

to strategically utilize these funds. Rather than using the loans to directly improve their own economy and

gain stability to allow for increased revenue to go towards their debt, they used the funds to directly pay

off debt, ignorantly still leaving their economy in ruins. Economic turmoil can be seen in Greece’s 62

unemployment rate, peaking over 25% as their economy has shrunk by the same figure over the previous

5 years. 63

What many fail to recognize as a key element in Greece’s failure, was their credit rating. Through

this crisis, many became more and more skeptical whether or not Greece could pay back their debt,

resulting in significant downgrades of their credit rating. In December of 2009, Fitch and Standard &

Poor’s gave Greece their first major credit downgrade, expressing concerns for their capability for

58 “Default Averted: Eurozone Agrees on 130­Billion­Euro Bailout for Greece,” Speigel, 21 February 2012, <http://www.spiegel.de/international/europe/default­averted­euro­zone­agrees­on­130­billion­euro­bailout­for­greece­a­816590.html> 59 A.P., “Germany Approves €130 Billion Bailout For Greece,” Business Insider, 27 February 2012, <http://www.businessinsider.com/germany­approves­130­billion­bailout­for­greece­2012­2> 60 Brian Peery, Portfolio Manager at Hennessy Funds 61 Ibid 62 Liz Alderman, “Explaining the Greek Debt Crisis,” NY Times, 8 April 2015, <http://www.nytimes.com/2015/04/09/business/international/explaining­the­greek­debt­crisis.html?_r=1> 63 Ibid

economic recovery. Greece replied to this downgrade by reducing their public expenditures by 10% in 64

an attempt to implement the austerity measures in order to appease the EU. These measures also resulted 65

in salary reductions along with tax increases. Ensuing Greece’s execution of these measures, were public

demonstrations and uprisings. As can be easily assumed, widespread riots do not make for a romantic 66

honeymoon nor a relaxing vacation. From 2009 to 2010, Greece experienced a 25% decrease in tourism,

having major consequences as this industry is another primary source of revenue, accounting for 15% of

its economic output and 20% of employment. In January of 2011, Greece was slapped with yet another 67

devastating downgrade: Fitch declared Greece’s rating as “junk”. Greece’s credit being downgraded to 68

“junk”, means that Greek bonds are no longer considered “investment grade” and are now treated as

riskier. As a result, the interest rates on the bonds are increased, making them less appealing to investors 69

and yielding less revenue for Greece . 70

Greece is currently on track to default on July 20 of 2015, needing to come up with €6.5 billion (~

$7.5 billion) by then. Although a default on July 20 is not currently inevitable, it (at this point) is 71

probable; however, a future Greek default is almost inevitable. With this massive debt, Greece is posed

with one of two simple, but difficult decisions: to stay or leave the Eurozone. As both sides have their

merit, this decision poses what could very well be the most difficult ultimatum in the history of Greece,

undoubtedly to have a long­lasting effect on their economic and political future. Should Greece decide to

withdraw from the Eurozone and go back to adopting the drachma, their debt would be significantly

64 Nick Thompson, “Timeline: Greece’s Financial Crisis,” CNN, 1 November 2011, <http://www.cnn.com/2011/WORLD/europe/06/23/greece.crisis.timeline/> 65 Ibid 66 Ibid 67 “Greece Tourism Suffers From Political Strife As Receipts Decline 15 Percent In First Quarter,” Huffington Post, 7 June 2012, <http://www.huffingtonpost.com/2012/06/07/greece­tourism­political­strife­decline_n_1576724.html> 68 Nick Thompson, “Timeline: Greece’s Financial Crisis,” CNN, 1 November 2011, <http://www.cnn.com/2011/WORLD/europe/06/23/greece.crisis.timeline/> 69 Brian Peery, Portfolio Manager at Hennessy Funds 70 Ibid 71 “Greece Will Default in June or July. Here Is the Breakdown in Cold Hard Numbers,” Russia Insider, 6 May 2015, <http://russia­insider.com/en/business/greece­will­default­june­or­july­here­breakdown­cold­hard­numbers/ri6508>

reduced as a tangible acknowledgment that Greece is unreliable to pay off the entirety of their debt,

creating an urge amongst those who loaned Greece funds, to receive even a portion of their total assets

loaned. Contrary to the benefits of withdrawing, a Greek default could pose as a very dangerous 72

precedent. Unsurprisingly, Greece is not the only European nation that is in dangerously high debt; Spain,

Ireland, Portugal, and Italy are all exceedingly indebted, and in the event that Greece secedes, these

nations could very easily make the argument that they, too, have a right to leave the Eurozone as a means

of partially resolving their debt. Should all of these nations leave the Eurozone, the EU would no 7374

longer be considered a European “Union”, and the value of the Euro, which sought to unite all European

nations under a common currency and exchange rate, would be heavily undermined. Not only would

nations that are, like Greece, heavily indebted want to leave the Euro, but economically thriving nations

would also want to leave. As can be seen since the early 20th century, Germany has long maintained a

nationalistic fervor amongst its country. As a result of this nationalism in Germany, many feel that they

should no longer be associated with the Euro, as economically inferior nations contribute to the

devaluation of the Euro, having negative effects on the economy of Germany. It is easily arguable that in 75

the event a nation like Germany decides to withdraw from the Eurozone and establish an independent

economy, they would be much more successful. For example, as a result of the austerity measures

implemented by the ECB throughout Europe, Germany has recently erupted into a series of riots, known

as the “Blockupy Movement”. The intent of the Blockupy Movement is to move away from the strict 76

austerity measures that have been imposed upon them and leading to a widespread decrease in economic

productivity and increase in joblessness. On the other hand, if Greece were to stay in the Eurozone 77

72 Brian Peery, Portfolio Manager at Hennessy Funds 73 Ibid 74 Tim Worstoll, “Both Grexit and Greek Default Are Desirable But Not Necessary,” Forbes, 19 April, 2015, <http://www.forbes.com/sites/timworstall/2015/04/19/both­grexit­and­greek­default­are­desirable­but­not­necessary/> 75 Ibid 76 Holly Yan, “Violence in Germany at European Central Bank Opening,” CNN, 18 March 2015, <http://www.cnn.com/2015/03/18/europe/germany­european­central­bank­protest/> 77 Ibis

(which is what will likely be encouraged), they will maintain their debt of approximately €339 billion (~

$383 billion) and in all likelihood, employ the assistance of the ECB to help pay off their debt. A very 78

similar issue arises with this option as does the first: should the ECB provide assistance to Greece, other

struggling nations would, too, seek the help of the ECB, essentially overloading them to the point where it

has the option to provide assistance to either every struggling nation, or none of them; neither choices are

preferable for the stability of the Euro and the ECB.

All in all, despite what many seem to notice as a more recent series of events leading to Greece’s

current economic crisis, their struggles can be traced back to the early 19th century. What is currently

taking effect now is the culmination of Greece’s terrible habit of postponing debt­payoffs for centuries,

finally reaching a point to where they can no longer push back the deadlines and feign stability. Greece’s

current circumstances are one that they have faced before, previously defaulting on multiple debts and

avoiding even more payments; however, their current situation is on a much larger scale, involving more

debt, and much higher stakes, not only for Greece, but the EU as an entirety. As of mid­to­late 2015, we

will see Greece face the consequences of their cumulation of such significant debt throughout history,

whose fate will ultimately be unanimously decided by the EC, IMF, EU, and Greece.

“Those who fail to learn from history are doomed to repeat it.” ­ Winston Churchill

78 National Debt Clock, <http://www.nationaldebtclocks.org/debtclock/greece>

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