Eurozone Crisis

Greece Case
CONTENT:
1. THE CAUSES

2. THE STORY

3. THE IMPACT

4. LESSONS LEARNED
-THE CAUSES-
1. Lacking domestic funds, Greek had to borrow
from outside

Bond yields continued to decrease because of the Greeks

participation in EU ( in 1981).
 2. The increasing in Greeks consuming led to the
national budget deficit.

In
Although
tourism their
andGDP
maritime
was increased
transport,
with
the
the
income
rate ofhad
4.3
The aging population
% (2001
decreased more
2007)than
compared
15% into2009
3.1% of Eurozone, the
and pension
deficit of thesystem.
budges was still overcame 3%GDP of EU
because of the fact that the consumption of
The public debt was 216 billion Euro in 01/2010.
government increased 87% while their income just
increased 1.31 times.
3. The fall of income creates the situation of deficit in
income and the increasing of public debt

Tax evasion and underground economy in Greek

ocupied 25% - 30% of its GDP( compare to 15.6% in
VN; 13.1% in China and Singapore; 11.3% in Japan)
 4. Greece is one of the European countries that have the
highest rate of corruption

Corruption
Not only does accounts
corruption
High
for 8% salary notGDP
Greece's only
cause tax evasion, but it
bears the burden of
also increases government
budget but also weakens
spending and aims to
the competitiveness of
maintain the high salary
Greek economy.
of state employees.
 5. Inefficency in using outside funds.

The participating in Eurozone => The government just

focused on infrastructure and forgot to pay the debt
had led to this obvious situation.
6. Lack of palpability and the investors faith.

The transparency in statistic number led to the lost

of trust in investors.

The appearance of the capital withdrawing in many

Greeks bank created the difficult situations in
raising capital throughout the world.
-THE STORY-
 -The Timeline-

Late 2010 2011 2012 2013 2014 2015

2009
 Announced a series of austerity measures to to secure a three-year
May
110 billion loan-the first bailout package.

The 1st
The 2nd
The 3rd
riots and protests

April Requested an initial loan of 45 billion from the EU and International

Monetary Fund (IMF).

Early stage An alarm for the economy

 The Fourth and the Fifth austerity package are passed

November: Lucas Papademos are new prime minister

All the implemented austerity measures have helped

Greece bring down its primary deficit.

However, there were some side-effects

 The Sixth austerity package is passed

The Second bailout The Seventh austerity

package is finalized. package was released

February March November

The Greek government did

finally default on its debt,
which was the largest default
in history by a government.
10 April, 2014 Greece returns to financial markets with the issue of Eurobonds

3 billion Euros (around 4.16 billion dollars) of 5 year

bonds at an interest rate of 4.95%

Greece is Back

Antonis Samaras
The Prime Minister of Greece
 Push for a renegotiation of bailoutGreek
termsPrime Minister Tsipras (left),
Debt cancellation Prime Minister of Italy Renzi (center)
and German Chancellor Angela Merkel
Renewed public sector spending celebrates Greek rescue agreement
Greek citizens was happy with
the results of the referendum dated 13/7.

EU countries agreed to continue

to assist Greece add between 80
to 83 billion euros.

13 July 62% problems

Greece of votes say NO
were => Increase
temporarily solvedthe risk out of EUROZONE

Operate
It will ainstead
referendum
bundle about
fourthe latest recommendations
payments due in June into of
a 1.6
5 July Alexis Tsipras, vows to end the30.
tough
thebillion
creditors
euroof spending
lump sum cuts and
payment
The leader of the leftist Syriza tax increases
due on June
The new Prime - Minister austerity measures.
4 June Delay a key debt payment to the International Monetary Fund (IMF)

25 January Syriza Wins Snap Elections

-THE IMPACT-
Being out of the Eurozone
can be a disaster to Greece

Greece because nothing can ensure that Greek economy can prosper if they
leave Eurozone.
Besides that, the savings of Greek people will lose value, while this country
cannot borrow international market, so the economy recovery will become
harder.
There are fears that if Greece leaf the Eurozone, the political unrest could be lead to.
 The US worries about
Greece turning Russia
Its probable that Greece relies on
Russia, but now we do not know
what Russia will offer to help
Greece.
In fact, the Greek prime-minister,
Alexis Tsipras called for Europe to
stop punishment on Russia,
although they are a NATO member.
Other countries, together with Greece, are leaving EU

Create a domino effect

When Greece is leaving, it

means that the green light
will turn on for the market
to attack other Eurozone's
members who have weak
financial strength
The worlds economy is affected

Greece accounts for a small proportion of the global economy, but it is a

member of the European common currency union and EURO is one of the major
currencies of the world. This means that the events in Greece are affecting the
entire worlds economy.

Global stock markets fluctuate according to the speculation about that Greece
may reach an agreement with its creditors or not. If Greece defaults, the
creditors such as the European Central Bank and other European countries can
also suffer damage.
-LESSONS LEARNED-
 The World Economy Is Fragile
 Lenders Eventually Say No
 Money Has to be Paid Back.
 Cheating on your bookkeeping will eventually catch
up with you

Banks are not secure

You can lose your job at any time

 There are common symptoms that we need to prevent: labor market
dualism, severe distortions in the economy, inefficient governance
(corruption, justice, high costs of doing business, ect.)
 Although the direct trade relation between two countries is still low
and Greece is a small economy in Europe, its debt default crisis had a
huge impact on the Eurozone economy. Consequently, it caused that
the demand for goods from Vietnam as well as inflows of foreign
investment will be affected.
 Therefore, Vietnam should:

Change the mindset of the national debt

Have more useful strategies to restructure the

budget and pay more attention for management
and supervision.

The most important is the need to cut spending

efficiently, avoid waste; besides, it should only
invest in those fields which are really needed and
potentially profitable.
KEY POINTS
1.THE CAUSES
2.THE STORY
3.THE IMPACT
4. LESSONS LEARNED
THE END
Group 8:
Dang Tran Thuy Tien
Pham Lac Thy
Le Nguyen Bao Ngoc
Nguyen Doan Tan Phat
Doan Diep Minh Anh