Greece Bailout and Shocks Around the World
As many people know Greece is in a state of deep financial debt by offering too many gov’t services without much tax revenue to back up their huge spending. Now the dog has bit them in the tail as Greece has experienced a financial teeter totter recently.
Recently the EU and the IMF both have to put final touch to their proposed bailouts of Greece. The EU and the IMF both have agreed on a fair and neutral bailout plan. Both of the multilateral agencies have agreed that the loan package will be less than $160 Billion as stated by a senior Eurogroup member on Sunday. In addition to massive spending cuts Greece has also placed an initiative that would bring the budget deficit to only 3% percent of GDP. This 3% however is not by Greece’s choosing but rather was chosen by the EU to try and limit further spending rushes as Greece has had.
Greece’s recent final troubles have brought markets all over the world down. The DJIA fell around 1.42% and the Nasdaq composite fell 2.02% and the S&P 500 took a nose dive as well to 1.67% below Thursday’s close. The Greece signal have had investors in the United States worried whether the bailout will become a reality and Greece can stay afloat. Investors in the stock market have become wary of Greece and have a constant eye market fluctuation due to the crisis. Greece will prove a challenge to investors around the world. However, since the IMF and the EU both have finalized a bailout plan for Greece we can afford to think that market will most probably close up on Monday’s trading. That is not to say to stop follow the Greek question. Greece’s financial troubles do signal a notion to foreign government all around the world. That massive spending and borrowing does leave a country poorer and appear weaker to nations around the world. Other nations should heed warnings from Greece that by increasing government spending and borrowing does hurt the national economy and does not stimulate it enough to bring about actual economic recovery. Nations around the world should realize that the market down turns are best handled not by bureaucrat in an office but rather by the market it self it is the fastest and most efficient way to help the economy along.
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