We sat and saw with bated breath the 'Drama with the Drachma' as Greece Prime minister Alexis Tsipras, sought out an 'honest compromise' for the mammoth debt restructuring for his country, even though the country itself remained divided on whether they planned to stay in the Eurozone or choose their unique Drachma. The drama was comparable to that regarding draconian landlords in India who not too long ago and perhaps still in a few areas, held the noose about the farmers, tightening it every year rather than letting them off while they argued to the repayment of their loans along with the never ending interests.
The Looming Debt
Greece had been bailed out before and sought a fresh relief bailout within the backdrop of its looming debt.
On 2 May 2010, the eu Commission, European Central Bank (ECB) and International Monetary Fund (IMF), later nicknamed the Troika, launched a €110 billion bailout loan to rescue Greece from sovereign default and cover its financial needs throughout May 2010 until June 2013 depending on implementation of austerity measures, structural reforms, and privatization of presidency assets. The relief as some referred to it as, stemmed from the belief in other words worries that 'Grexit' or eliminating Greece from the Eurozone could spell disaster for that Euro and also for the world economy.
Actually, the problem was simpler and internal . It absolutely was the challenge of balance of payments. Clearly, the Greeks were spending over these folks were meant to, creating more domestic debt. In layman terms, the nation was borrowing money to pay on keeping the economy afloat because GDP loomed further. Is it wise on the part of negligence the us government to keep spending with the same rate? Is it wise by Troika to bail them out probably aware they will perhaps default around the payouts once more as the economy was simply not generating enough to ensure they are afloat?
On 5 July 2015 the Greek voters passed a referendum rejecting the relation to its a bailout proposition with 61 percent voting 'No' contrary to the austerity measures boosting the leftwing Prime Minister Alexis Tsipras stance to hold the nation's pride. However, the rising debt which pushed the request the bailout of 7.2 billion euro pushed them towards Eurozone rather than Drachma, much from the ire of the local population who had faced the brunt from the previous austerity measures. Although Tsipras argued the vote "is not only a mandate of rupture with Europe, but a mandate that bolsters our negotiating strength to realize a practical deal".
The offer struck after much negotiations entails:
tax rise on shipping companies
unifying VAT rates at standard 23%, including restaurants and catering
phasing out solidarity grant for pensioners by 2019
€300m ($332m; ¨º216m) defence spending cuts by 2016
privatisation of ports and sell-off of remaining shares in telecoms giant OTE
scrapping 30% tax break for wealthiest islands
In summary Greece has built a T-Rex to eliminating the elephant.
Can this arise in our lives?
The larger question we all face is Can the Greece story be repeated? Can this arise in our lives? The answer then is an easy and 'yes'. Yes it can. Although, debt in itself is just not bad or odious if it's employed for investment to get future earnings and positive return higher than the expense of debt. However, while we are spending a lot more than we earn and borrow to sustain our consumption, we're increasing our debt minus the assurance to pay for it back. India has become given $16.83 billion as loans by IBRD around 2015 alone. As long as a rustic follows the standard wisdom of not spending greater than we earn it might save itself as well as the people of the country. Being prudent in money matters would only save the united states from being run by its' creditors.
