The Financial Crisis of Greece and the Way Out

Topics: Monetary policy, Economics, Macroeconomics Pages: 3 (1183 words) Published: June 2, 2013
The financial crisis of Greece and way out
The present financial crisis of Greece has been the cumulative effects of internal fiscal and monetary policy mismanagement that its government knowingly and unknowingly has followed over several years. Now the burning question is what the actual way out is of this deadlock in which it is trapped. Several remedial steps have been taken to solve the problem alongside minimizing the inflictions that may be imposed on the economy in implementing such steps. The notable measures have been the two steps bailout and implementing austerity package. But consensus is yet to be achieved on these several measures because two steps bailouts have imposed some conditions like implementing austerity packages, privatizations of government owned assets, and structural reforms. On the other hand, some have argued in favor of the declaration of orderly default by Greece and leaving Eurozone, and introducing its own historical currency Drachma. Now the viewpoints are divided into two sides: on the one hand, keeping Greece in Eurozone and giving bailouts and implementing the above mentioned reforms, and, on the other hand, declaring orderly default position and leaving the Eurozone and introducing its own currency. Along with these, political unrest and cataclysm must be considered as thousands have already protested against austerity packages implementation because such implementation would hurt a lot of people and snatch food from their mouths. So, what kind of way out we can contemplate in such situation where we have to look at the same to current political and economic unrest and long-term economic prospect and sustained economic growth. Lets us consider short-run effect and long-run effect of such measures. Short-rut effect analysis:

If we take the above fact into our consideration, then we see that the most sever short-run effect of Greece’s crisis and its way out would have is its most fatal effect in the short-run causing...
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