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Is the Greece Default Imminent and What You Can Learn From It

Is the Greece Default Imminent and What You Can Learn From It
"""If you have followed the events in Europe for any length of time, you are aware that many Eurozone countries are enduring the same economic crisis that the United States faced in 2009. If we strip away all of the economic and political chatter, the story boils down to this: Due to a multitude of poor financial decisions, many Eurozone countries are on the verge of financial Armageddon, with Greece being the closest.

Despite the fact that Greece is essentially bankrupt, a large number of Americans are unaware of the tragedy that continues to manifest in this small country. Why is Greece in this predicament, what will happen if they default on their debts, and what can we learn from this?

The Account

The story is rich in drama and history, but much of the problem stems from the fact that Greece has failed to effectively tax its citizens. According to the New York Times, Greece has permitted large numbers of citizens and businesses to evade their tax obligations. If these taxes were collected, Greece would be able to satisfy a large portion of its obligations, according to the same report, but raising taxes on its citizens is impractical. Others observe that in Greece's own budget, government spending now exceeds 50 percent of the country's gross domestic product (GDP), the total value of all goods and services sold.

This means that half of the total output of products and services is used to fund current expenditures. The remainder of the budget, which includes a substantial amount of uncollected revenue, pays down the debt, but it is insufficient. The European Central Bank is responsible for repaying Greece's rapidly accumulating debt, which is primarily a result of the country's high borrowing rates. Recently, Greece's interest rate has surpassed 50 percent. Eurozone nations are no longer willing to lend Greece money, so the country must pay its debts with funds it does not have.

Will They Deficit Pay?

Hardly anyone who observes the Eurozone crisis believes that Greece will not default. Without finding an alternative source of funds, they are effectively out of money and have no plausible means to avoid defaulting by September.

If they do default, the global financial markets will likely react negatively, putting even more pressure on your retirement accounts. Some economists believe that this event alone could trigger a second recession in the United States. Obviously, everyone hopes that the Eurozone will find a means to prevent Greece from defaulting, but the outlook is not encouraging. The worst-case scenario is possible.

What can You Discover?

If it happened to Greece, it could happen to you as well. If you spend more than you earn, you will ultimately lose the ability to pay your bills. Greece is evidence that everything we've heard about debt is true for countries as well. Debt is perilous, and just because you believe you have it under control today does not mean that an unforeseen event won't occur tomorrow that allows it to overtake you and your family. If the worst-case scenario occurs and a Greek default causes a recession in the United States, could this be the event that causes you to lose your job? Could you still make your debt payments?

The lesson to be learned from the Greece crisis is to always prepare for the worst-case scenario and maintain a substantial financial buffer.""

" - https://www.affordablecebu.com/
 

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"Is the Greece Default Imminent and What You Can Learn From It" was written by Mary under the Finance / Wealth category. It has been read 237 times and generated 1 comments. The article was created on and updated on 01 June 2023.
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