A couple of decades ago ten nations marshaled in Euro Core, which was to become the European Union. Their currency was based on the euro, and as the European Union grew in nations, the euro took on a life of its own, and at points in time, rivaled and even surpassed the dollar in purchasing capacity. Greece was one of the initial partners, but during 2007 they started to become the weak link of the union and eventually a “Greek Crisis” began. Looking back, one can compare their economic model to that of other doomed countries, both in the European Union and outside of the union.
As an example, their retirement age is 62 years.
Compared to the United States, who, traditionally, let workers receive full benefits at age was 65, and early retirement benefits at age 62, with a permanent reduction in 80 percent of the full benefit amount. Now, the full benefit age is 66 for individuals born in 1943-1954, and ascends to 67 for those born in 1960 or later. A nation’s tax base comes from the income taxes paid by eligible workers, in addition to corporate taxes, and other tax generated income.
Greece’s dwindling tax base.
A large part of Greece’s financial erosion comes from a dwindling tax base, because people over 62 are collecting pensions, the young unemployment rate is at 30%, and movement of goods and services are stifled, because of a depressed economy. Greece has acquired numerous economic bail out plans from the European Union and the International Monetary Fund. Now in the past France was the stepchild of the union, but Greece with its multiple debt crises syndrome, constantly looks desperate, and has become ground zero for EU government regulators, who constantly monitor their activities, in relation to their past and current banking crises.
A factor that is not discussed much, but is a contributing factor to their depressed economy, happens to be the fact that a large percentage of its citizens were born between 1945 and 1964. This is the baby Boomer era. So you have a large segment of the population who are baby boomers looking forward to retirement at 62, with high unemployment an a marginal tax base. The citizens for the most part feel that their government is not handling the economy very well, but before anything can really change, there needs to be legislative restructuring that will raise the retirement age to at least (67), in order to spark up the economy.
Recent election and what did they accomplish?
Recently elections were held in Greece, letting the citizens decide if they want to go on receiving bail out money, mainly from the IMF and EU. Their choice was to let the country default and not try to honor the requirements stated by their lenders. This would surly be a death blow to Greece, because they would literately be at the mercy of industrialized nations. This decision will bring them to third world status.
Their only other hope is to attempt to restructure a previous bail out plan, take more cuts to pensions, while at the same time raising taxes on the already demoralized citizens. The other members of the EU want Greece to remain a viable “country state”, because it was one of the founding members, also because there are three other EU countries who could fall, if Greece falls, and finally simply for world appearances.
The next few weeks, months, and years will definitely be trying times for the future Greek crisis.
France and Germany are taking the lead in providing help for them, but they want reduce spending to be involved. Currently the situation looks desperate, because of the mounting debt crises, banking crises, and the intense pressure coming from the government regulators, something has to happen soon.