BACKGROUND AND BRIEF
HISTORY OF GREEK CRISIS
Greek is one of the
members of European Union. Although Greek is a small state and only has a fewresidents,
but this state has the income per capita that more than $ 20.000 AS. With the per
capita income that significant enough, thus this state is being the state that
has good bargaining position in the economics unity in euro one.
As a state that reveal
as a state which has so many civilization that recognized by the world, Greek
also become the source of thought which apparently became as the culture in
life society further around the world. Instead of that life is a part of the
modern life. The source of that thoughtpriory is in the trade term. With the
historical background that supporting the condition, thus Greek able to become
the state that has significantly source of income in global economics flow.
Greek is a state which become a source of 2,6 parts from overall gross domestic
product in euro zone.
This crisis that
experienced by Greek since the end of 2009 become the issue which significant
enough and grab the world attention. This is caused by the fact that Greek is a
member of Europe Union which the members are the other developed states in
Europe. So when the economics of Greek fall, this is become the collective
anxiety. Even not only by the state that as the same membership of Europe Union,
but also the global economics that will get the impact indirectly. This is
recognized as the effect of crisis which called domino effect. In other words,
when the Greek faced bankrupt, it worried would give directly impact for the
state of Europe union member. For the example are Germany and France as the
prior pillar of Europe union. Even indirectly wouldinfluence the other state,
although it is not the same state which use euro as the currency. The example
is the decline of Europe stock with the significant rate, when the Germany
government was pending the aids funding for Greek. Then the investors started
to draw their fund more than US $ 2 billion from the Europe bourses. The impact
that also felt by the external side of Europe union is after the euro rate
depreciated about 9.92% (-9,92%), counted since the end of 2009 to May 2010,
which is the depreciation of rate of Poundsterling reached 8, 06 % (- 8,06 %)
to the United States dollar.This is also clarified by the fact that Greek have
no their national currency anymore, but as one of the users of euro as an
agreement. So Greek can not conduct the devaluation to press the domestic aggregate
demandsto give the stimulation to conduct state export. And suitable with the
domino effect theory, thus the other state especially which also use the euro
currency, can be sure will face the crisis also.
Fiscal crisis which experienced
by Greek like as that have ever happened in Europe in 1931 which faced by
Austria as the first, then vined and made Germany and England collapse too,
then it gave the serious impact to the world as a caution of world crisis.
ANALYSIS
The crisis which faced by Greek also caused by the more complex factors
than it appear. But which have pointed as the major caution is the internal
factor that happened in Greek. That crisis is caused by the existence of the bureaucracysystem and no discipline
state administrationand causing so many more corruption case happened. With the
origin term, the main source of Greek crisis called “fakelaki” it means little
envelope. The phenomenon which able to explain this factor is it
implementation. Corruptions in Greek happened and became a fact as a culture even.
So many the easiness of bureaucracy and the quality of public service
determined by the amount of bribe which gave to the bureaucratsand
officialswhohave. Even Greek is a state with the corruption perceptions
index which positioned in ranking 71 of 180 state. And the other fact that
happened is 30 percent from overall taxes income is received to the corruptor
hands. So this is made the condition of Greek worst and more difficult to recover
from the crisis. The weak of the discipline budget and the quality of taxes
administration of state appear from the emergence of so many corruption cases, manipulation ofaccountingand waste of budget of
state fund, and also misallocated budget and inefficiently. Then the existence
of other factors that made the worst crisis covering Greek, it is about the
debt of state which has over limited and can be no longer in its term. The debt
of Greek reach 300 billion Euro and not far from the problem of scattering state money or we called it as misallocation of the
budget of the state. About the debts also the fund that took because of Olympiad
that was held by the Greek in 2004. It involved the sophisticated technology
expensively. And this is also explain that the caution of state crisis also caused
by the allocation of state’s budget is not responsible.
The causes which can
be overseen directly by the economics experts also proof in economics growth.
For clearer, The Greek export is only, while the import rate can reach $ 60 billion.
This is like an explanation of a fact of the deficit in Greek’s balance of
trade, which is importis higher than export. Then the crisis also about the
accumulation of the deficit budget which happened perpetually, which is about 6
percent from the gross domestic product in 30 years latest.Actually the deficit
rate of Greek is higher doubly from the maximum rate of deficit budget that has
stipulated in euro union agreement, which is 3 percent. Added by the fact of debt
stocks ratio of Greek to the their gross domestic product which has reached 111
percent, this rate also so close to the double rate of maximum limitation in
euro union agreement which is 60 percent.
This crisis happened
in long term and supported by the reluctance of market to absorb the obligation
and securities (SUN/SURAT UTANG NEGARA) of Greek which actually will use to pay
the debt in amount 20 billion euro ( at the time will be maturity in April –
May 2010 ). So, with the difficulties to sell the obligation and their securities,
was made Greek faced the possibilities fail to pay their loan. And this is also
will give the indirectly impact to the other euro union members. It will be
reduced the trustiness from international society to the credibility of Europe
union. Besides, euro union has no mechanism to help its member which faced financial
problem.
Then the other
condition which happened as effect of the crisis that covered Greek actually
apparently become the causality effect from its crisis more continuing.
Basically Greek is a state which able to attract so many investors. But the
crisis that hitEurope,especially Greek, emerging the distrust from those
investors. This is surely made slower. But thecrisisisgetting
worseby the fact thatinvestorsnolongerconsider theinvestment potentialthat
wasindeedownedby aGreek.
Besidesthe deteriorationGreece alsocoupled with
thedecline inmoralityaspect ofthe supportpeople.Because, whenGreece
wasdroppedbythe crisis, manypeoplealso doupheaval. Butthis occursalsobecause of
theeffects ofthe crisis thatmakesthe Greek governmentimplement somepoliciesthat
are consideredburdensomepeople.Among others aresaneringsalaries, delaying retirement,
cuttingmilitaryfundingallocationto supplementreserves, andraisingsometaxes. Consequently,
there is unrest andstrikeaction. It is certainlymore to
makenationalstabilitybecomesincreasingly unstableandmake thecountrymore and
moreproblematic. The other circumstancewhich not support, among others, alsothedoubtsfrom
the European Union sidetoimmediately providebailout funds. But this
isalsocausedby theobservation of theindexof corruption inGreeceis so high. Buteventuallyevenmadethe
stepsanewloan packageto Greece, after the firstloan packagegrantedin 2010did
not make thecrisis can behandledwell. Besideseffortstoincrease therole
ofprivate investorsin thedebtrestructuringare alsocultivated.
COUNCLUSION
The crisisis a
situationthatcan be experiencedby any country. Buteach
country requirestheir own waystomakethe countrycan recover fromthe crisis.Suitable
forcultivatedGreekof whichis to limit thebudgetdeficitof no morethan 2% ofgross domesticproduct, considera
moreflexibleexchange ratesystem, while maintaining
theability ofdomesticconsumptionandgovernmentspendingin order to avoidgreater
pressuredeficitthatcould potentially createmoregreat. In
addition,the European Union'ssystemreallyshould not always only have topay attention tothe monetarysectorandfinancialsector, butalso pursueeconomicgrowthin the real sectorso thatmore peoplecan
occupyjobs.Dueto the movement ofthe economyandthe real sector, it will encouragea moresignificanteconomicgrowth. Andthese effortsalsoyou must turnsupportedby creatinga
favorablenationalstability. This is
topreventtheupheavalthatexacerbatesthe crisis.Duetonational stabilityis
compromised,it isincreasinglydamaginginvestor confidenceandunderminethe
investmentclimateis conducive.Sothe Greek crisismaybe a lesson
foreverycountrytoconsidermanyother aspectsthat are importantin determining
thecountry'seconomic circumstances.
SOURCES
1.
“AntisipasiKrisisYunani” Riau Pos, 13 Mei 2010, h.1.
INTERNATIONAL
ECONOMICS ASSIGNMENT
TAKE HOME PAPER
“THE CRISIS OF GREEK AND ITS IMPACT”
Zipora Anastasia
105120401121005
International Relations
THE FACULTY OF SOCIAL AND POLITICAL SCIENCES
BRAWIJAYA UNIVERSITY – MALANG
2010 / 2011
