Recently I attended a presentation which talked about the current world economic situation. Although I am generally an optimistic person, I will admit that the outlook is grim.
In my opinion, the state of Greece and its debt is one of the most pressing factors on today’s world economy. Greece is weeks away from defaulting on its debt and declaring bankruptcy. An exceptionally high debt level combined with a weakened economy has Greece unable to make its debt payments.
The EU has offered an $179 Billion ($179,000,000,000) bailout package which includes writing down 50% of its debt. However, the bailout comes with the condition of Austerity Measures. Because the situation is so dire, these measures are severe. The general public is adamantly opposed to the imposed measures and Greece’s weak government has failed to act decisively.
Now, if I was facing bankruptcy, I would obviously understand that I would have to make sacrifices. And if my bankers would forgive one half of my debt for stepping up to the plate, I think I would do that. But, Greece is not a person, it is many people and the austerity measures affects each of them differently. A Greek person who just retired might have to take a 40% cut in their pension and be unable to find work to supplement their cash flow. That is why they take to the streets and rise up for their cause.
So, do you want to know what the Greek Austerity Measures are? If not, look at today’s Top 7 List.
1. Public Sector wages will be cut between 20% and 30%.
2. Pensions to be reduced by between 20% and 40%.
3. Their Sales Tax rate will be increased, “sin” taxes will be increased by 33%, and a luxury tax will be introduced.
4. A new “Solidarity Tax” will be introduced (1% to 5%) to assist the unemployed.
5. Health and Defence spending to be cut by over $3.7 billion over 5 years
6. Education spending to be reduced by the merger or closing of 1,976 schools.
7. The Government will sell stakes in many of its assets including banks, utilities, ports, airports, and other land holdings.
If you were living in Greece, would you agree to these Austerity Measures?