Greece defaulting on its payments Essay Example | Topics and Well Written Essays - 2500 words

Greece defaulting on its payments - Essay Example They asked for help from European countries and the IMF for the release of the appropriate kind of the funds. This was done to avoid the defaulting on the debts. The connivance of this cross was at the top of the agenda for most of the nations. This threatened to spread to the other nations of the Euro zone, like that of Italy and Spain (Shumway, 2004). Greece has been at the centre of the costs of the Euro zone. It has accumulated one of the highest levels of the public debt. It has also got one of the largest amounts of the deficit in the budget. This is one of the qualities of the budget and as been at the forefront of the financial pressures. It was the first member to ask for the assistance from the other Euro zone members for the financial assistance. This has been the status of the development of the diverse form of the response to the debt. There have a been a lot of initiatives on the part of the IMF( International Monetary Fund),the European officials, the ECB( European Cen tral Bank) and the officials at the Euro zone have bee trying to alleviate the levels of the financial crisis, by undertaking a number of steps. At the persuasion of the various European leaders, the holders of the Greek bonds have been read to do be sold the off at lower prices to ease the pressure on the Greek economy. The way that the things are progressing, Greece could be the first economically advanced country in the world to default on payments. The developments of Greece are of interest to the whole world as the crisis has chances of â€Å"spilling over â€Å"the other economies. This shall impact the functional aspects of many countries over a sustained period. The Greece government has a long history of the public dent. Since the independence from the Ottoman Empire in 1832, the economy is in default. The economists have been pointing to a number of the factors that have affected this kind of the change, the main among them being the extreme levels of the control of the state economy, the public administration in a very bad shape, the tax evasion is at the highest levels in the recent times and the large degree of the political clienteles have been the primary factors causing the problem. The large scale flow of the capital at the low rates in 2000 and the economic crisis of 2008-2009 further increased the problems. These have been one of the main reasons for exacting this inflexion point. BACKGROUND OF THE PROBLEM The preparation of the Euro as the national currency was preceded by a number of the specific factors. One of the primary factors was the fact that the costs of the borrowing dropped in a very dramatic manner. The use of the different kind of the resources was established for the dropping of the rates of the bond. This had a great impact on the complete process of the development of the economy. There was a thought process that the convergence would be high among the different members. This was re-iterated by the different countries whil e going the Euro zone (Korablev, 2010). The new kinds of the leverage on the payment of the taxes were not used for the level of the government funding. The qualities of the important were not increased; the amount of the public spending was increased. This led to an increase of the amount of the deficit, causing the rise of the problems. This had an impact on the different kinds of the government processes. The