Greece has been going through a financial meltdown for years. And since the country is a part of the eurozone, what happens in Greece doesn’t stay in Greece.
In 2001, Greece was given a chance to join the eurozone, and enjoy similar legitimacy in global markets as countries like Germany. Surprise, surprise, this was a flawed plan.
To prove that Greece could handle sitting at the EU table, the country had to show that its budget was in check. It wasn’t. But Greece pretended that it was by doing things like moving certain expenses off the books. Once it got the OK to join the eurozone, the country started partying like it was at a big, fat, Greek wedding. Public sector wages rose to way more than a private-sector paycheck. Pension spending was way up, and it didn’t help that the retirement age was 58. Or that tax evasion was the norm. Then the global financial crisis hit, and soon everyone woke up to a Greek tragedy.
Ding, ding, ding. Greece eventually realized it was hundreds of billions of dollars in debt. It was forced to ask its European parents for help. The so-called “troika” of international creditors -- the IMF, ECB, and euro member countries -- stepped in with a series of bailouts. In exchange, the troika said Greece better shape up. That meant austerity measures like public sector layoffs, pension cuts, and tax hikes.
Living standards are way down, and more than a quarter of the country is unemployed. Enter: a political party called Syriza that pledged to change all that. It was elected to power earlier this year on promises to undo austerity. Insert Europe laughing. For months, the new government and its creditors fought over the terms of yet another bailout plan. In the meantime, Greece became the first eurozone country to go into default.
Greece and its international parents finally agreed on the terms for a third bailout — and it means mo’ money, mo’ austerity for the country. But it’s unclear if Greece’s anti-austerity lawmakers are going to go along with the plan. They're deciding whether hold a snap election to kick the current prime minister out of power.
Greece’s troubles threaten to bring instability to not only the eurozone, but the entire global economy.