Overall Eurozone in Comparison to the Geek Financial Crisis

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Submitted By kylemcdevitt
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Overall Eurozone in comparison to the Geek Financial Crisis

The Greek economy is worth about $200 billion dollars, which represents a mere 2% of the entire Eurozone. Though, the public perception that deems Greece insignificant to the financial health of the Eurozone is incorrect. The policymakers are to blame, for their fear of losing the market’s trust is where Greece’s Eurozone impact originated. Their actions were shortsighted in the face of a serious financial problem and disregarded recommended protocol from the International Monetary Fund.
The IMF recommends that, countries with high outstanding debt take corrective action by balancing their budget and devaluing their currency. This framework is in place to avoid paying back more then you can and coupled with fiscal austerity, which raises taxes and cuts spending. This plan would and did worsen the Greek economy, especially when Greece had the most outstanding tax debts then any other country in Europe in 2010, because decreasing national income would inhibit a county from repaying their debts. That is why the final phase of the IMF’s protocol, to provide a large and more cost effective “monetary stimulus”, is key in offsetting financial loss from austerity and allowing Greece to Grow by spending.
Eurozone policy makers marginalized the IMF’s customary advice and decided that they could preserve their long-term financial health with a short-term solution. Allowing Greece to default on its debt was out of the question in 2010 because policy makers feared a worse case scenario that destroyed the Eurozone, starting with its weakest link. A weak link could be categorized as a country that’s economy represents only 2% of the 17 countries in the Eurozone. A Greek default meant a possibility that the French and German banks that leant them money might go broke, following by larger and larger lending…...

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