The financial crisis in Greece

I think you need to actually read what has happened rather than let your beliefs blind you.

Greece was a member of the EU, the EU decided to make it so all EU countries had to be part of the Euro when they met certain conditions.

Greece had major issues, mostly related to tax collection, either through avoidance or large loopholes, a generous pension scheme and a very rigid labour market.

Greece cooked the books to make it look like they met those conditions, I suspect because the Greek politicians thought joining the Eurozone would be to their advantage.

Over the next ten years, Greece received ~€9 billion euros a year from the EU and ran a deficit. This was largely ignored by the Eurozone countries, as times were good no one minded.

Greece had hid the fact the country went through 3 recessions and in 2010.

In 2010 the EU arranged a €240 billion bail out and a 50% write down of private held debt. In return they expected Greece to resolve their spending deficit. This was primarily funded by other Eurozone countries. Since it was a mix of the IMF, ECB and Eurozone this was called the Troika by Greece.

The Greek government began spending cuts "austerity", but only made limited changes to try and resolve the fundamental problems in the economy.

Early this year Syriza came to power and started upsetting the apple cart. They admonished the EU for making a statement concerning Ukraine and broke other unwritten "rules" of EU diplomacy. Syriza promised to scrap austerity, stay in the Euro and scrap the Troika.

They refused to talk to their creditors the troika. Demanding that they would only talk to politicians. Eventually Syriza accepted they would have to deal with the people they owed money to.

The Greek finance minister was sidelined in April, after he offended the EU negotiating team.Tipiras spun a story, but German news showed the German finance minister was furious.

The impression I got was eu deals tend to involve both side laying out their red lines and a compromise happens (usually with a fudge or technicality). Varofoukis went in playing game theory and upset everyone.

The president of the EU decided to swoop in and fix things. He seemed really upbeat and positive.

Tipiras reopened the national broadcaster, the slight budget surplus the last government achieved evaporated, Tipiras suggested Germany owed the Greece war reparations equal to their debt. The Greek press took to calling the Germans nazis.

The tone from the EU president changed, he was quoted saying he was disappointed with Tipiras. There was a quote suggesting a "loss of trust". An example would be Tipiras going to Moscow to short support.

The issue seemed centered around pensions. The Greek creditors wanted pension spending reduced. There seemed the suggestion they wanted the retirement age increased and the system simplified. Tipiras suggested it would impoverish existing pensioners.

Things stalled until two weeks ago, when a deal needed to be reached in order for a IMF payment to happen. In May it was suggested a referendum might fix the deadlock.

Greece's only new proposals involved solving the difference by raising taxes. This was roundly rejected because Greece already has an issue with tax collection.

Greece's referendum was the last straw, by refusing to negotiate until it happened they ensured the deal couldn't be renegotiated. Any deal after the 30th June would be a 'new' deal which would need to be negotiated.

I'm not certain what the point of the referendum is, since the original deal was never finalised and will be irrelevant after tomorrow.

I honestly think Syriza were working to exit the euro

/r/explainlikeimfive Thread Parent