Causes of the Greek liquidity crisis; how conditions were...

Causes of the Greek liquidity crisis; how conditions were before the crisis Events that happened preceding the crisis The structural economic support weakened –when Greece entered the euro zone in 2001 the convergence criteria which supposed to provide sound financial systems within the economy and the GSP were established to prevent financial and economic crises. Greece entered the euro zone without meeting the requirements of the convergence criteria, how this might have happened is due structural failures or a political failure of European leaders, this put Greece already at a disadvantage plus†¦show more content†¦When the government sells these bonds there are many risk factors to take into consideration, the interest rates these bonds are sold at is one of the risk factors to consider. There are other countries with sustainable growths and it was assumed that those countries would lend a helping hand to Greece because if their policies worked in their countries then Greece would try and incorporate those policies in their own country. The sustainability of the Greece debt was a lmost guaranteed by the other member states with more stable monetary policies .Greece reached a point where its public deficit was three times higher than the previous government and this was a clear indicator that Greece was in a crisis and that it would take a long period meaning many years to pay back the debt, and it would need to be bailout. The build up to the Greek crisis Firstly In Greece, there were no systems to adjust money and credit growth, so money was spent by the government as the would see it fit to do so, there were loans made and loans repaid causing it to run large current account and fiscal deficits without taking any policy measures. There were still some countries in Europe that had their own debt but it seemed that Greece was at its worst. The budget had been in deficit for many consecutive years. They were small because fiscal shocks were smaller and, more importantly, because theShow MoreRelatedEssay on ARC model in euro crisis2987 Words   |  12 Pages control in Euro Crisis Introduction Compared with the worldwide financial crisis happened since 2008, the European sovereign debt crisis has been the most serious problem for the ECM. This crisis, also called â€Å"the Euro Crisis†, has been regarded as the most serious financial crisis at least since 1930s. This crisis began with the Greek fiscal crisis in the autumn of 2009, and then it evolved into the â€Å"PIIGS Crisis†Ã¢â‚¬â€five main EuropeanRead MoreWhat Successful Economies Do Is Keep It For A Minimum?3758 Words   |  16 Pagesnature functions, whether we like it or not. What successful economies do is keep it to a minimum. 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