Greece-y Situation

For a quick crash course: The recession in Greece was fueled by both the U.S. mortgage loan crisis in 2007 and the high ratio of debt and GDP. In 2010 Greece signed a Memorandum of Understanding (contract) between themselves and financial donors such as the International Monetary Fund (IMF) so that Greece could receive money and avoid bankruptcy. On June 30, 2015 Greece became the first developed country to default on its loans from the IMF. As a result Greece has been financially cut off by IMF resources and by other donors.

So what does this mean for the youth in Greece? Youth in this scenario is being defined as young people 15-35. The youth population in Greece is already suffering from the recession, as fewer are employed and more are looking for a job. According to the Hellenic Statistical Authority, more than 640,000 youths have already lost their jobs to older adults.

Greek youths are now fighting a different battle, being outsiders to a labor market than favors older employees. Therefore, even if a situation where employment sectors retain total employment, there is still job loss among the youth. As a result of the limited job opportunities for Greece’s youth, more than 200,000 Greeks younger than 35, educated and skilled, have emigrated abroad. Greece is losing its bright-minded youth and hindering the opportunity for innovation because all the bright minds are leaving for places with greater incentives.

It is the loss of the Greek State that it is losing the creativity and collaboration from the country’s younger generations.  In addition, education and employment preferences in Greece do not follow the job market trends. The most popular jobs, such as law and medicine, are hit the hardest by the recession, and lead to even higher unemployment rates by graduation.  Dimitris, a student at PEA this summer, highlights that the recession has taken a toll on the Greek education system. He says this is largely seen with the colleges in Greece, as sporadic shutdowns are common.  If Greece can offer more incentives to youth to stay and get trained in certain lacking fields, it can boost its economy and lessen its debt.


Greeks on Greece

Greece is facing a very difficult situation. Over the last 10 years Greece’s debt has ballooned to disproportionate levels, mainly from money borrowed from other European countries and European banks. This money was used mainly to pay salaries and interest payments with little investment initiative. In late 2009, fears developed about Greece’s ability to pay its debt obligations that led in 2010 to the first memorandum and Stability Program implemented by the European Union.

The total debt is $340 billion, which the country owes to various European countries and banks. The new socialist government that came into power in January 2015 promised to renegotiate the existing memorandum but with little luck.

On top of that, Greece had to pay back 1.6 billion euros to the IMF by the 30th of June. But it failed to do so, becoming the first developed country to fail on an IMF loan repayment.

Instead of that, Alexis Tsipras, the prime minister, in order to get out of the difficult situation, proclaimed a referendum to let the citizens decide if the new austerity measures imposed by the institutions, the debtor countries of the European Union, the European central Bank and the IMF-International monetary fund,were accepted or not. Sixty-one percent of Greeks voted “no.”

After a lot of conversations on June 28, the banks were officially closed and there was a restricted amount of cash that each person was allowed to take out (withdraw) per day and that was 60 euros( capital control).

The European leaders gave Alexis Tsipras an ultimatum to either come up with a final proposal of action or face GREXIT. The proposal stated that the Greek government had to prove that the prime minister was serious about putting  Greek finances in order and reforming the euro. He had to do that by Sunday July 12th, otherwise Greece would be out of the eurozone. Greece sent the EU an official plan to cut spending, raise taxes, phase out tax discounts on some tourist islands and much more.

In the meantime the prime minister had a meeting with the opposition leaders and they gave him consent to sign an agreement for Greece to stay in the Eurozone.

After a long night in Brussels, on July 12th, they managed to come to an agreement, that puts the discussion of GREXIT out of the picture and strengthening the ties between the European countries. As the French President Francois Hollande said on twitter: “the Greek program is serious, credible and shows a determination to remain in the euro area. Nothing is done,everything can be done.”

In conclusion, nearly six months after the elections of the “Syriza” party, after the banks closures and the July 5th bailout referendum Greece has a deal. Greece after all will stay in the EU and won’t have its own currency. In my opinion I can say mission accomplished.