Greek Government Steps In to Avoid Total Collapse
The Greek government is taking strong steps to avoid a total meltdown. As if its own financial crisis weren’t enough, it was found that it’s lending practices and financial measures are completely in violation of Eurozone standards. These violations are what led to the countrie’s woes. Debts that are more than the national income. Cheap lending that caused huge bubbles and collapses along many markets. We’re still talking about Greece right?
The proposed plans are as follows. One of the primary causes of their financial crisis was their spending. The government has started slashing away at spending and has implemented austerity measures aimed at reducing the deficit by more than €10 billion ($13.7 billion). To bring in more income or save on spending it has:
- raised taxes on fuel,
- raised taxes on tobacco and alcohol,
- raised the retirement age by two years,
- imposed public sector pay cuts
- applied tough new tax evasion regulations.
The biggest fear the rest of Europe had and one of the chief reasons they did not want IMF intervention was the threat of protests and riots. Predictably, the general public is quite unhappy with the government plans. There have been warnings of resistance from various sectors of society. Farmers have begun blockading roads to demand greater government subsidies, while on February 10, workers nationwide staged a one-day strike closing airports, government offices, courts and schools. More strikes are expected to follow.
One of the main reasons Greece has not been bailed out, is due to the fact that it has the record for defaulting on loans, bonds and other financial promises. A step in by another Eurozone nation is not only unlikely, but impossible due to the current financial situation going on in other countries. While they may not be as severe as Greece they are definitely not financial sound, by any measure. Member nations are left to fend for themselves during this crisis. This is the shame that Europe is feeling right now and why they are also keeping Washington at arms length. While they are not stepping in to assist a member nation, they do not want to admit they are incapable of doing so to Washington. There are reports that the Eurozone’s dominant economy, Germany, is leading calls for a “firewall” to prevent Greece’s crisis from spreading, but as yet no concrete proposals have been made public.
France seems to be the country that is having the most dialogue with Greece at this time. They have extended a gesture of loan guarantee to bolster confidence in the region, along with Germany, but there will be no bailout, nor a mass lump sum loan.
Spain was also proposing measure to curtail its spending along the same lines as Greece, pay cuts and tax hikes. Tremendous rumbling is coming from its state employee sector however.