Greece and Euro crises: How Greece reached Capital Control?

ISLAMABAD: Greece has been a subject of concern for years now with the economy dwindling and no real development in the economy Euro-zone has been striving to stabilize the situation but to no avail.

Negotiation for an bailout extension has been declined by the creditors forcing Greece into capital controls and Bank Holidays would start as soon as Monday, moreover Stock Market would also remain close.

European Central Bank has declined new emergency support to Greek Banks deciding to maintain current levels of funding, which is certainly not enough.Greece is likely to default on a loan payment to International Monetary Fund scheduled this Tuesday and bailout talks collapsed on Saturday after Prime Minister Alexis Tsipras walked away from talks calling out for a referendum handing out the decision to the citizens.

Thousands are in ques in Greece to withdraw their savings as Greece face a expulsion from Europe let’s take a detailed look at the situation in the past.

What is Greece’s problem?
Unrestrained spending and failure of implementation of financial reforms has plunged Greece deeper and deeper into debts after the global economic downfall. A glance at the investment to GDP ratio would show you that in the past two decades or so the ration had been striving to stabilize but in the last 10 years it has not been able to recover.

How big are these debts?
The Greek National Debt stands at a little over an extravagant 300 billion euros. This number is bigger than the Greek economy. The following chart displays the gravity of the situation in Greece in comparison with the Great Depression that knocked United States on to it’s back.

How’s the GDP condition?
Greece has been suffering bad for quite some time now and the economy is constantly falling yet at the same time Euro-zone has been stable yet Greece has been struggling with its debts and other factors of development.

What is the Greek Investment Structure like?

Where the structure of investment seems to be failing on one front it is actually quite stable in the other areas showing that the situation is quite stable in the other machinery and equipment area, buildings other than dwellings and structures and transport equipment investments.

What did the creditors offered Greece?

Creditors offered a €15.5bn bailout money in a five-month extension till the end of November – €8.7bn from the Euro-zone bailout fund, €3.3bn in SMP (ECB bond profits due to Greece) and €3.5bn from IMF.

How does the situation affect Euro-zone?

Greece is already in major breach of Euro-zone rules on deficit management and with the financial markets betting the country will default on its debts, this reflects badly on the credibility of the euro. There are also fears that financial doubts will infect other nations at the low end of Europe’s economic scale, with Portugal and the Republic of Ireland coming under scrutiny. If Europe needs to resort to rescue packages involving bodies such as the International Monetary Fund, this would further damage the euro’s reputation and could lead to a substantial fall against other key currencies.