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The Euro’s Continuous Fall From Grace
Perspective | 18 March 2015
By:

The Euro has taken it on the chin this year, there has been very little memory of the last time it had peaked.

At hand, there is no saying how long the 19-nation currency is going to stay down and is it really worth investors holding on to their Euros in the hopes of seeing a silver lining?

What has brought the Euro to its knees over the past decade is what analysis are calling ‘The Greek Crisis’. This is a financial disaster that is severely crippling the Greek economy.

This all started a few decades ago with two of the most popular political parties going head to head. The government then started to increase the payroll of the country, this was more of a bribery method, and the idea behind this was that ‘if you do this for me, I will do this for you’.

The more favours that were exchanged the higher the salaries and the increase in positions that were suddenly available in the Government.

Once Greece had exhausted their funds, the country turned to its neighbors and requested additional support in order to continue to rally against each other.

Few questions were asked as Greece was part of the European Union, and there one hand washes the other and funds were transferred.

However, it was stated that Greece was obliged to obey the stringent financial limits. This included not permitting its national budget deficit to over exceed 3 percent of its economic output.

This is the very beginning of how the Greeks debt soared. During this time, the European Union showed no major concern as the Greek government continued to report that their national budget deficit was only at 3.4 percent.

Whilst pulling the wool over their European partner’s eyes, Greece continued to borrow. It is as simple as managing your own banking account, it is of utmost importance to understand the basics of money management. One should borrow only what one can afford to pay back.

Greece not only deceived its partners but totally eschewing the rules of how to spend borrowed funds in a responsible way. In addition, Greece had a total disregard for following the rules of borrowing finances from others.

This has now resulted in a disastrous debt that the country was incapable to repay, possibly leading to an even greater financial crisis in the countries that had advanced the money to Greece.

The great reveal of all Greece’s hidden secrets came to be during the election of a new government where the countries financial books were exposed.

Obviously the 3.4 percent deficit was a tall tale – the truth was that Greece was operating on a national deficit of just over 15 percent, this is 12 percent in excess of the European Union’s borrowing regulation.

This revelation of the countries borrowing costs hit the roof and instantly it was just an impossible task for the country to repay its debt. Greece would have to look at taking out another loan to pay this debt, entering into a vicious cycle.

In 2010, the countries making up the European Union decided to step in with an offer of 110 billion euro bailout. This money was bestowed to Greece with the conditions of decreasing all government spending, wage cuts and lowering of all budgets.

The second bailout accumulated to 130 billion euros, 40 of which would go directly to the Greek banking sector, who have reported massive losses, 30 billion was allocated to the countries private debtors.

The conditions have lead to an extremely lethargic Greek economy.

In conclusion, it is forecast by many financial experts that despite all the stern measures and bailout procedures articulated to Greece, it will not be an immediate solution. Greece may reach financial stability possibly later than 2020.

With these financial crisis issues whether they are negative or positive there are means for potentially capitalizing on each situation and earning a profit along the way.

This article is brought to you by Brad Addley from BINARYOPTIONS360.


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