The High Cost of Greece’s Debt

the greek december

Image by Yiannis Efstathopoulos

The High Cost of Greece’s Debt

Due to massive mismanagement and government corruption, Greece has found itself in a world of financial trouble, and no matter what they do, it does not seem they are going to be able to help themselves. After drawing up a plan to offer bonds in an attempt to raise some of the 54 billion euros Greece needs to sustain itself for 2010, the markets failed to respond as investors shunned the country’s offer when worries surfaced regarding its growing debt.

The government raised its increased estimate for Greece’s debt above their most recent figures, which means international relief is a certainty. The financing will have to come from an emergency aid package that was arranged two weeks ago in Brussels in which its euro zone partners – the 16 countries that use the euro – pledged up to 30 billion euros in loans to Greece. The International Monetary Fund has committed to providing an additional 15 billion euros.

The 30 billion euros in loans, pledged by the euro zone partners, are still waiting approval by legislators in some of the countries. The strongest resistance is coming from Germany as French and German banks currently hold the largest portions of Greece’s sovereign debt. A default on such a loan would weigh heavily on the country by adding financial strain. However, Germany has pledged to solidarity and has agreed to help Greece as an attempt to stabilize the euro.

Athens will most likely receive its money in small pieces rather than in one large cheque. For now, this money may help Greece meet its short-term debt, as it needs 10 billion euros in May to cover redemptions and primary government deficit. It has few options for fuelling growth and the expected outcome is the demand for Greece to make even greater deficit cuts. Greece did not mention any new budget cuts though. The government has already employed two austerity packages aimed at cutting spending and increasing revenue, which have fuelled unrest from unions.

For Greece, Spain, Italy, Ireland and Portugal, this financial issue has highlighted the constraints of euro membership as they are facing years of belt-tightening just when their economies could use a lift from additional spending. Other countries such as Austria, the Netherlands and Germany have kept their debt down, in part, by restraining domestic wage increases.

Mismanagement of money can be detrimental not only to countries but to anyone, and asking to borrow additional money when you still owe makes any lender question your ability to deal with finances. If your financial circumstances are in a similar situation, you may want to consider a car title loan or a bad credit loan in an attempt to consolidate and get your money back on track. There are many private lending institutions that offer bad credit loans. They can easily be found on-line 24-hours a day.

the greek december

Image by Yiannis Efstathopoulos