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Originally posted by ClarksonSlays
Can someone explain this to a clueless american? Thanks
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- Greece is part of the Eurozone with Germany, The Netherlands, France and a lot of other countries. They share a currency.
- The EU economies are completely out of sync. To join the EU zone, they have to follow certain rules regarding their fiscal policies, unemployment rates, deficit levels, etc. Germany can meet those requirements easily; other countries can't. (I would argue that the policies of the ECB are mostly targetted to help the rich EU countries, but that's a whole nother story.)
- Greece had a high deficit back in 2008, because of the economy crisis.
- Because the countries share a currency, investors can choose to just invest in Germany and The Netherlands or demand high interest rates in Greece.
- The Greece economy plummeted.
- They were offered bailouts. Less severe than now because France and Germany were afraid of the effect that a Greece default would have on their local banks.
- It's 2015. Greece's economy is still messed up but they have a new government. The new government wants to negotiate the bailout deals, claiming they are not fair. This time however, Greece's loan are carried by local governments and not local banks, so the rest of the Eurozone is in a stronger position to negotiate terms that are favorable to them.
- Negotations stalled. Greece was unable to pay interest on its debt.
- They held a referendum to get the people's opinion on whether Greece shoul accept the EU's deal.
- They just voted NO.