Greece: A History of Financial Disaster
Dionysius the Elder, a ruler in ancient Greece, ran up massive debts to pay for his multiple military campaigns. His solution? Change every drachma into two drachmas. Pulling money from nowhere to cover massive debts has seemed to be a monetary policy throughout Greek's history.
First, let us observe the 1800s. Greek defaulted in 1843 (thirteen years after becoming a modern state), 1860, and 1893. Starting in 1800, based on economic studies, Greece has delayed payments in fifty percent of the years to the present. Moving into the 1900's, history depicts the global economy becoming industrially driven, while Greece falls increasingly behind. Occupation by the Nazis which was immediately followed by an intense civil war made economic progress essentially stagnate. Furthermore, the prominent political parties of 1960s and 1970s alienated cultural and industrial assimilation into mainstream Europe. Greece was still essentially owned by a few wealthy dynasties, and was the opposite of a growing and thriving economy. So this begs the question why Greece was allowed into the Eurozone in the first place?
Countries that were far richer than Greece, such as Germany and France, were sensible options for a successful monetary European union under a single currency. However, turning away Greece from this effort to unite Europe was politically ignorant and the population yearned for a modernized economy. Thus, in 2001 Greece officially adopted the Euro. From 2001 to 2007 capital flooded the country and Greece was fastest growing country in the Eurozone. However, by 2012 Greece was already in its fifth straight year of a recession. The country had taken 142 Billion dollars in loans from the ECB and Greek Central Bank due to losing a quarter of total bank deposits. The Athex Composite Index consistently declined from 2007 to 2012.
Moreover, The ECB has to buy Greek Government bonds to keep differing debt markets afloat. Needing an international bailout in 2012, Greece made intense labor market reforms. Violent protests soon followed and Greek looked like a country in complete Chaos. Where are they as of today? Greece has become the first developed country to default on an IMF loan. They are now planned to receive a 7 billion eurobacked by the EU. Another bailout and more unhappy citizens in Greece. Looking at this Greek monetary policy throughout history one can just point to the simple phrase, history repeats itself.