GREECE is thought to be on the verge of an economic collapse. Thousands of residents took to the streets today to protest the possible cuts, in what is being called a “one day strike”. The problem is huge and if it gets out of control, many believe it could cause bigger issues for the U.S. than our recent recession.
To sum it up, in an effort to bail out Greece, the European Union gave them $158 billion dollars, by holding Greek bonds. In return, Greece is paying them an incredibly high yield of 18% (interest rate) and also promised to cut spending. As they now try to cut costs the residents are angry, which is what caused the violent protests.
Greece is now contemplating not paying back the European Union, because they still need to raise $100 million dollars. This is where the problem lies, many now fear if they do not pay it back, then other countries including Ireland, Portugal and Spain may follow suit. This would mean a huge loss for the banks and likely cause a domino effect, hitting the U.S. hard. If the European markets crash, we can be certain it will mean significant losses globally.
As many Americans have not yet bailed out of the recent crisis, this is sure to hurt the recovery or even create worldwide chaos. Today’s news, already affected the stock market so imagine what a full collapse in Greece would do. Let’s hope they figure something out quickly, or we may all have to downsize even more.
But of course, just like the news media always hypes these stories, if you dig deeper there are indications this is all being over played. Fear is always the way to scare the us right? I was already sucked in, so it works.
What do you think?