Grece_Debt - U pdated Over the last decade Greece went on a...

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Updated: April 23, 2010 Over the last decade, Greece went on a debt binge that came to an end in December 2009, when a new prime minister announced that his predecessor had disguised the size of the country's ballooning deficit. That set off a crisis of confidence and revealed deep fissures between members of the euro zone, as Germany in particular resisted bailing out what it saw as a prolifligate neighbor. After rounds of deep budget cuts and pledges of support from the rest of Europe failed to stop the steady rise of the interest rates Greece was being charged, Prime Minister George A. Papandreou on April 23, 2010 formally requested an international bailout, calling his country's economy "a sinking ship.'' The bailout, agreed to two weeks earlier, foresees making available up to €30 billion, or $40 billion, in loans from Greece's euro-zone partners, and up to €15 billion from the International Monetary Fund. The roots of the crisis go back to the strong euro and rock-bottom interest rates that prevailed for much of the previous decade. Greece took advantage of this easy money to drive up borrowing by the country's consumers and its government, which built up $400 billion in debt. When the global economy crumpled, those chickens came home to roost. The trigger for the crisis was Greece's admission in late 2009 that its government deficit would be 12.7 percent of its gross domestic product, not the 3.7 percent the previous government had forecast earlier. Investors were stunned. In early 2010, fears over a potential default grew into a full-fledged financial panic, as investors questioned whether Greece's Socialist government could push through the tough measures it has promised to
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This note was uploaded on 05/07/2011 for the course BUS 1302 taught by Professor Falcon during the Spring '11 term at University of Texas at Dallas, Richardson.

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Grece_Debt - U pdated Over the last decade Greece went on a...

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