Note: This article will explain the cause of the Greek crisis. No analysis will be provided.
Greece first amassed enormous debt by continually spending beyond its means, borrowing extensively from European banks to fund public works projects and massive entitlements in a country where the retirement age is 57. However, Greece could not pay those loans back and was unable to raise funds from the public since investors feared losing money lent to Greece.
In 2010, Greece was hurtling toward bankruptcy and financial crisis, threatening the stability of the Eurozone. And so the country received a bailout totaling 240 billion euros from the troika: the European Central Bank, the International Monetary Fund and the European Commission.
The bailout terms included austerity measures that meant less spending, higher taxes, and other measures designed to right Greek finances. However, Greece used most of the bailout money to repay loans, which continue to pile up in a stagnating economy. And in terms of policy, Greece failed to follow the austerity measures, conducting business as usual and continuing to increase debt.
Today, Greece’s debt sits at roughly 200 percent of its GDP. Unemployment is at 25 percent.