Two years ago, there was a crisis in Greece, when it couldn't pay back debt that it had taken. The government's debt was 120% of GDP then. The country simply couldn't afford to pay back its loans, and the impact would have been felt all over Europe, where banks and funds had lent to Greek institutions and to the Greek government. Greece wasn't the only one in trouble — Portugal, Ireland, Italy and Spain were also in the now-infamous acronym for countries in trouble, PIIGS.
The initial reaction to the problems in Greece was to give them more money to help them pay back what they owed. A 120 billion Euro package first materialized on the promise, by the Greeks, that they'd try to earn more money from taxes and spend less. The problem? More than 50% of the Greek economy was from government spending, and reducing that meant that lots of Greek people would earn lesser and thus pay lesser taxes. The "black" or unaccounted economy in Greece remains very large, with people preferring to notRead More »from The Drachma Drama