It’s been three years since we brought you our last Moron’s Guide to the Euro Crisis, and it continues to be a thing you should probably know about. You may think you’ve got it covered: the Greek economy is in trouble again, people are lining up at ATMs, and something bad is about to go down at Euro Disney. But trust us, if you get cornered by your uncle who works in finance while you’re reloading on macaroni salad at your Fourth of July party, you’re going to want to have a better understanding of Greece’s debt crisis, and what it means for the future of the European Union. Here’s a brief guide for the woefully ignorant.
Hey, long time no see. This should be easier than usual. I actually know a lot about Greek history!
Oh, great! So as you know, Greece was in particularly rough shape after the 2008 financial crisis, and in 2010 it took bailout money from the troika – a fancy name for the European Commission, the European Central Bank, and the International Monetary Fund. That didn’t do the trick, so it took another bailout in 2012, for a grand total of €240 billion. But those bailouts were accompanied by harsh austerity measures …
Whoa, I meant, like, ancient Greek history. You know, the Persian Wars, Xerxes – oh, and McNulty!
You have 300 on Blu-ray.
Right. I thought the Greeks were total badasses. Why is their economy tanking?
Well, as I was saying, lenders told Greece that they had to implement austerity measures, or tax increases and steep budget cuts. This involved reducing wages, pensions, and spending on social services. Meanwhile, prices shot up. Time helpfully crunched the numbers to explain the Greek austerity measures to Americans. If the same cuts were imposed in the U.S. over the past few years, we would have seen the hourly minimum wage drop from $7.25 to $5.66, the average government worker’s annual salary decrease from $51,340 to $43,639, and the average senior citizen’s monthly check drop from $1,294 to $776.
So while the bailout money kept Greece afloat over the past five years, the larger scheme didn’t work. Greece was able to keep making payments to its creditors, but its overall financial situation continued to spiral downward. Its economy shrunk by a quarter in the past five years, one in four Greeks are unemployed, and as of 2013, 44 percent of Greeks were living below the poverty line.