After days of intense talks, the Europeans apparently have finally reached a final deal to help Greece out of its latest financial misery.
Greece is broke. With a gross domestic product of about US$238 billion, the country had a government debt of about US$346 billion. Some of the country’s banks have very low reserves of cash. People have already made a rush and withdrawn their money from them. This has forced the government to impose a tight limit on withdrawals in order to avoid a bank collapse of the type that hit Newfoundland in 1894.
Under the new deal, the European Union will place officials in key parts of the Greek government in order to ensure that the Greeks actually implement reforms that are part of the bail-out deal.
It’s a tough response, but then again the Greeks are in a tough economic spot. The third tough spot, since 2009. For all that, though, there are people around the world who believe the whole problem is imaginary. They believe that something called “austerity” is the real culprit. If you just got rid of it, so this way of thinking goes, the Greeks could go back to the way things used to be.
