Greece crisis

Money Banking and Financial Management

Presentation By

Shubham Khandelwal (2013B3A4685P)Nitesh Kumar Jakhar (2013B3AB578P)

Should Greece be Removed From European Union

INTRODUCTION TO GREECE

• Greece is a country located in Southern Europe on the southern end of the Balkan point possessing an archipelago of about 2,000 islands.

INTRODUCTION TO GREECE

• Capital – Athens• Currency before Euro – Drachma• Adopted Euro as a currency in 2000• Main sectors with greater distribution to

GDP (a). Tourism (b). Shipping

INTRODUCTION TO EURO ZONE

• A geographic and economic region that consists of all the European union countries that have fully incorporated the euro as their national currency.

• The euro zone consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain.

PHILOSOPHY OF EURO ZONE

• Single Market for free circulation of goods, capital, people and services.

• Single currency to eliminate exchange rate transaction costs and risks.

• Macroeconomic stability (e.g. low inflation) and financial integration of the nations in the Euro zone.

• Each member country to become stronger against other big economies.

WHY GREECE IN TROUBLE?

Just like a household that spends more money each month than it brings in, Greece has piled up a mountain of debt by spending beyond its means.

THE REASONS BEHIND THE CRISIS

• 2004 Summer Olympic games• 2007 US Recession• Increase of labor cost• Inefficient Pension System• Early Retirement• Benefits• Tax Evasion• Euro Currency• Mismanagement• Corruption

The Greek Situation

• 400 Billion Dollars in debt• Debt burden = 170% of annual GDP• Unemployment rate = 25%; for people under

age 25, 50%• 30% of population living under poverty• Widespread unrest and rioting• Politically and economically unstable

Greece’s G.D.P. and Unemployment Rates in Europe First quarter 2015

Debt in the European Union ( Fourth quarter of 2014 )

Possible Solutions

• Apply austerity measures and pay back all the debt.

• Greece stays in the EU and EU eventually turns into a single monetary and fiscal union.

• Greece exits from Euro zone

If Greece exits from Euro Zone• Risk of contagion and domino effect• Return to Drachma• Isolationalism and effect on

globalization/trade

Greece only a lesson to be learnt not a lesson to be taught

• Move faster towards the union and not away from the union.

• Asian Union• Eurasian Union• American and Asian Union and eventually a World Union.

ANY QUESTIONS ?,

IDEAS & COMMENTS.