Greece is sliding down a slippery slope. The country, which teetered on the brink of bankruptcy before in 2010 before European bankers bailed them out, is now on shaky economic ground again. Five years ago, the banks required the Greeks to take “austerity” measures, namely inflicting government spending cuts.
When the country joined the Euro in 2001, it eliminated the ability for the country to adjust its currency.
It has 11 million people and an economy about the size of Connecticut’s, as Katie Couric reported for Yahoo Finance.
The Greek government has reversed its opposition of a new round of austerity measures that include sales tax hikes and cuts in state spending for pensions. By doing so, Athens conceded to demands of its European creditors in return for a $59 billion bailout package. This helps avoid a collapse of the economy in Greece and should stabilize market volatility across the globe. The problem is that the estimated amount required to bail out the Greeks has risen to $96 billion, and the figure may be hard for the European bankers to swallow.
Avoiding a meltdown of the Greek economy is important in the long run for small business owners in the U.S., despite the fact that Greece is half a world away. The 21st century economy is interconnected as never before. Thus, when markets are shaky, lenders become increasingly more risk averse, which in turn, makes it more difficult for entrepreneurs to secure the capital they need for growth.
Greece is not the only country with economic woes; Italy, Portugal and Ireland.