This week we have a guest blog from forexcharts.net. They give some insight and analysis into the problems faced by Greece and the EU.
The shocks of 2008-09 global recession are continuing to haunt some members of European Economic and Monetary Union and more so for Greece. The growing Economic woes continue to add fuel to the fire. This has made the situation very uncertain for Greece.
Greece has been member of the European Union since 1981 and member of the European monetary union since the year 2001. However it seems that in time off adversity, it has to find its own economic and social solutions.
Greece, an ancient old, well developed country, is known for the birth of modern Olympics and Democracy. However for some time, it is passing through a very difficult political and economical challenge. The country is faced with rising debt, job losses, strikes and limited buying power with people. Though monetary union had given birth to common currency, the political union has yet to take shape in the real sense. In time of Greece’s difficult money market situation, it is not getting adequate support from leading and financial sound co-members like Germany or others. Thus the positive effect of political or currency union is not visible in the country.
The questions are many. What is the solution to the current problems of Greece? How can EU help? Shall other European economies like Germany enter the scene?
Today Greece has high fiscal deficit, its aging manpower is not as performing, its products are no more competitive and is under increasing foreign debts. The increasing interest cost and public pension system has made situation more difficult. Another issue is that Greece had not initiated economic reforms as happened in the other parts of the World. Had the government be watchful, it could have avoided the present economic mess it is facing. It is certainly its own creation.
The problem is not of Greece alone and another few European countries are passing through similar situation. In view of the massive support required, the well of Europeans countries like Germany, France and UK are scared to enter the scene.
If we go twenty years back, we will see that the concept of European economic and monetary union was to work as a single entity and provide support to each other in difficult times. Have those objectives been achieved? Today it looks questionable.
Another consideration is that, can global financial institutions like IMF or World Bank help? In such situations, this Global financial Institutions recommend currency devaluation but Greece having a common currency Euro cannot choose this path.
Greece is left with limited options. It has to go for reforms, wage war on wastage and do massive cost cutting. Any system loopholes need to be considered and corrected. Improved revenue Monitoring and collection are essential. However its implications are long drawn and lead to initial resistance, high rate of unemployment and political instability. Thus Greece has to find acceptable solutions and also use its good office and seek support of other European members and other international institutions, which are in a position to help.
It is a testing time for Greece and few other European Union member countries. It is equally a testing time for European Union, as any further delay in providing support to ailing economies of Europe, will badly weaken the Euro; adversely affect the European stock markets and the European Union itself. And also this change can be seen at live forex chart Let us hope, wish and pray that combined wisdom and strategy of all stakeholders is quickly finalised and implemented so that Greece like its glorious history comes out of this big financial mess and regains sound health quickly.