This article examines the state of Greece in the European Union. It states that this decline was inevitable, if not by Greece than one of the other weaker members of the E.U. The European Commission who is supporting the Greek government's plan to cut deficit by 3 percent has said that they will be closely watching the distribution of these funds "to ensure that it (Greece) keeps its promises."
It continues to explain that the government says it will present a plan for pension reform and a bolder package of budget cuts soon. However, investors have been cautious when investing in Greece.
If these programs fail Greece will most likely have to be bailed out. Which brings other problems since there is a "no bail-out" clause in the E.U. One remedy would be for Greece to arrange a bridging loan from another euro-zone country in good credit, such as Germany. However there are also problems with this, since the euro area has no mechanism to help a member that cannot fund itself in capital markets.
2 comments:
Greece could also try to get financial aid from IMF, however, I think they should use this option as a last resort.
Or the EU Parliament could gather together in Brussels and pass some reforms to make the system more flexible to debt problems.
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