1. What event initially precipitated the Greek crisis?
2. Why was Greece in so much trouble?
3. What problems in Greece highlighted wider problems in the Eurozone?
4. How did the Greek crisis affect the euro?
5. What pro-growth policies could the Greeks adopt that would allow them to produce more and how would adopting them help resolve their crisis?
In October 2009, Greece elected George Papandreou, who had promised to increase public spending and clean up corruption. At an EU summit during December of that year, to regain the confidence of his EU colleagues, Mr. Papandreou delivered a short, blunt speech that stunned the 26 bloc members:
''Corruption, cronyism and a lack of transparency have undermined the state and have to be eliminated,'' and added basically that his country was corrupt from A to Z.While it had been suspected for some time, he said that the magnitude of Greece's budget deficit was not the 3.7% of GDP reported in April 2009, nor the feared 6%, but nearly 13%! After numerous upward revisions, it turned out to be 15.8%! Greece understated its deficits in previous years as well. From 1995-2010, Greek deficits averaged nearly 6%, and exceeded the Maastricht limit of 3% in every year.