Week 6: Greece - Economy Thibaut De Bruyker

Greece has been great!  Yesterday evening I met a Greek economist in a local pub. This friendly guy was the first one who could clearly tell what is going on with the Greek economy. I’ll try to summarise here in my blog, what this friendly man explained to me.

He started by making sure that I was aware of the fact that Greece is in a very bad economic situation. Rating agency Standard & Pours has downgraded Greek debt to a very low rating, which means it views Greece as a highly risky place to invest.

At this moment I asked the guy; of all European countries why Greece?

He answered me that Greece has been living beyond its means in recent years, and its rising level of debt has placed a huge pressure on the country’s economy. The Greek government borrowed heavily and spend a lot during the past decade.

Maybe I was a bit selfish but maybe you are concerned of the same thing as I was. Do we have to be afraid this has any effect on other European countries?

The economist laughs and calms me down with the words “don’t be afraid to ask, this is probably the first and the last time we’ll see each other.”

To answer to the question; everyone who trades with the Eurozone is affected because of the impact on the common European currency.

So are there plans to make sure Greece’s economy returns back to normal?

Yes, Greek government pledged to make further spending cuts and tax increases on top of other measurements already taken. There will be a lot of sacrifices for Greece and especially for the Greeks. These Greeks have been active the last year, with (violent) public protests.

This man knew what he was talking about I thought, therefore I asked him what he thought was the solution for this Greek crisis.

What he said was a bit shocking; he wanted Greece to leave the euro. A country that left the euro could allow its currency to fall in value and thus improve its competitiveness. But there are also downsides to this idea. Investors could fear other countries to follow, potentially leading to the break-up of the monetary union itself.

To say goodbye to all of you I want to say that you don’t have to be afraid to book your holiday to Greece because I haven’t noticed anything of the Greek economic problems AT ALL!

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