greece bailout - Greece Bailout ACCT 4312 By Michelle...

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Greece Bailout ACCT 4312 By: Michelle Dockery 04/26/12
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What circumstances led to the economic disaster? To say the least , Greece has been living beyond it means since before it ever adopted the euro . Ever since they have joined the euro , public spending increased dramatically and public sector wages nearly doubled . And while money has flowed out of the government funds , the income has been hit by pervasive tax evasion . Greece was ill-prepared to cope when the global financial downturn hit , and as a result , in May 2010 it was given 110bn euros of bailout loans to help the country survive the crisis . And shortly thereafter , in July 2011 , it was allotted to receive another 109bn euros . When this appeared to still not be enough , in October 2011 , the eurozone asked banks to consent to a 50 percent “haircut” on their Greek holdings , along with an enhanced 130bn euro bailout . Given all of that , the economic situation in Greece has deteriorated even further and the new deal entails an even larger debt write-off than earlier what was approved by the banks before . What actions were taken by the Greece Government to cure the situation? The deal was pounded out in Brussels during a long , 12 hours , of negotiations that ran through the night .
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What is the dollar/euro amount of the bail out/(s)? The second rescue package for Greece is worth €130bn (£108bn) . What is the socio-economic impact of the bail out to Greece, European Union and Global Community? Greece’s debt pile will decrease to 120 . 5 percent of its GDP by 2020 . This is only slightly above the long-term debt sustainability target set by the International Monetary Fund . Private sector lenders such as European banks will lose money . They will have to write off 53 . 5 percent of the money they are owed by Greece . And the primary concern now is that the Greek economy is so bad that these write offs may still not be enough to reduce Greece’s debts to the level the country can afford over the long term .
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