Why did the financial crisis happen in Greece? By Shun

Why did the financial crisis happen in Greece?

Shunya Asano

            Since Greece, other European nations, and all countries around the world are confronting a controversy about the financial crisis in Greece, I strongly feel that this contemporary topic should be discussed in my essay. This topic will be divided with three essays, and at this time I would like to explain why the financial crisis happened in Greece.

            Firstly, since Greece is one of the members of the European Union, I would like to briefly mention about what the European Union is. The origin of European Union was established from France, Belgium, Netherland, West Germany, Luxemburg, and Italy. These countries constituted initial European Union which was called European Coal & Steel Community. Since there were two big world wars in Europe, the union of European countries was crucial element for preventing to create another world war. In addition, natural resources were main conflict materials and controversies in war. When Jean Monnet who was French businessperson advocated the importance of union of European countries, France and West Germany finally negotiated the international management of steel and coal which were mostly located in Alsace and Lorraine provinces. As a result, the pursuing of peace by European countries was established with strong united communities in 1952 (Ikegami, 173). If these countries strongly pursued the peace of Europe, why financial crisis in Greece happened then?

When the Greek administration changed its regime in October 2009, huge amount of debt was revealed by Georgios Andreas Papandreou regime. At this year, although the Greek government reported that the debt of Greek finance was 300 hundred million dollars, a real financial debt which was revealed by Papandreou regime was 600 hundred million dollars (Ikegami, 165). This matter is especially crucial for European nations because countries such as Germany, France, and Netherland borrowed large amount of money, and this indicates that countries which are mentioned above were waiting money back from Greece with some profits. This indicates how the Greek financial crisis devastated other European nation’s financial stabilities.

Mainly, there were two crucial reasons why this happened in Greece. First reason is the number of government workers and its treatment. For example, European Union and International Ministry of Finance already demanded to the Greek government that Greece should reduce 15,000 government workers in 2012 (Nihonkeizai shinbun, 2012). According to statistic, Japanese government workers will be able to get annuity when they reach 65 years old, and the amount of money will be almost 40~50% of income at the active service. However, Greek government workers will be able to get annuity when they reach 61 years old, and the amount of money will be 80% of income at the active service (Ikegami, 167). In addition, government workers should not be large number of people because it typically lacks competitive motivation rather than companies.

Another important reason is about tax evasion. The Greek government was generally reluctant to check actual profits and gains from companies or stores. Therefore, it was not difficult to gain extra profits from tax evasion for companies and stores since the government did not actually interfere that problem. The loss of profit by tax evasion finally increased to 250 hundred million dollars at annual rate, and this is estimated one fifth of tax yields of the government (Ikegami, 169).

Works Cited

Ikegami, Akira. Ikegami akira no manaberu news. Tokyo: Kairyusha, 2010. Print.

“Patients in pain over Greek debt crisis.” Yahoo News. June. 2012. Web. 12. June. 2012.

“Girisha koumuin ichi man go sennin sakugen.” Nihon Keizai shinbun. Feb. 2012. Web.

     12. June. 2012.