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Saturday, 12 May 2012

Michael Portillo's 'Great Euro Crisis'

On BBC2 on Wednesday night was a very information documentary about the Eurozone crisis, in particular Greece. You can watch it here on BBC iplayer. Remember it won't be there forever, do take time to watch it.

  • One quarter shops have closed since the crisis began in 2008
  • Social costs: Graffiti everywhere, dereliction
  • Michael Portillo's view is that Greece's joining the euro created the crisis
  • Introduction of the Euro: purpose - to help the poorer European countries catch up to their richer counterparts
  • The Euro has made Greece uncompetitive, considering the Drachma was weak and this helped fuel demand for their exports
  • The Euro also increased the amount of exports entering the country, particularly cars (what made it easier was the wide availability of credit for Greeks to finance the purchase of these cars)
  • In 6 years, Greece's deficit from Germany went up from under €3bn to over €8bn
  • Another contribution to the debt: transport advancements (equipment could not be manufactured in Greece, so had to be imported by German companies) were paid for with debt, and tax evasion
  • Devaluing the currency (going back to the Drachma) can help improve their competitiveness
  • Government put national assets (e.g. the airport) among other austerity measures, to try to save the country