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Greece has been in the news because of its economic problems. What are these problems? Let’s understand Understanding the Greece story.

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Presentation on theme: "Greece has been in the news because of its economic problems. What are these problems? Let’s understand Understanding the Greece story."— Presentation transcript:

1 Greece has been in the news because of its economic problems. What are these problems? Let’s understand Understanding the Greece story

2 To understand this let’s imagine Greece, Portugal, Spain, Italy, Ireland, Germany, France, are not countries but brothers

3 Interestingly, the brothers share a common pool account named “EURO”. In short the brothers would contribute into and spend from the common account. Understanding the Greece story

4 Amongst the brothers, Greece happened to be a spendthrift person. In order to maintain his lifestyle Greece had been borrowing money from his friends. Understanding the Greece story

5 While Greece had been spending recklessly his earnings did not keep pace with the same. Understanding the Greece story

6 Hence he was on a perpetual debt. To pay this debt he had been taking additional debt from his friends. Understanding the Greece story

7 Each time he took a new debt he agreed to a higher interest rate. Friends would lend him money because they knew he was sharing the common pool account with his brothers.

8 Hence he was on a perpetual debt. Understanding the Greece story

9 This poor track record of Greece worried his brothers because they shared the common family pool account with him. Understanding the Greece story

10 Because of Greece’s spending ways, the credibility of the family pool account suffered.

11 In order to protect the family name the brothers had no choice but to bail out Greece time and again. Understanding the Greece story

12 The brothers were unhappy with this situation. They felt that it is unfair for them to bail out their spendthrift brother Greece time and again. Understanding the Greece story

13 They threatened to take strict action against Greece unless he changed his spendthrift attitude. Understanding the Greece story

14 They ordered Greece to change his lifestyle and lead a simpler life thereby increasing his “savings” to repay his debt. Understanding the Greece story

15 This is the Greece story. The family pool account is nothing but the common currency EURO. Understanding the Greece story

16 The brothers are the countries of the European Union who are afraid that because of Greece the value of their currency will depreciate. Understanding the Greece story

17 The frugal lifestyle being imposed are the economic reforms for austerity that was passed by the Greece parliament. Understanding the Greece story

18 Hope you now understand the “Greece” story Please give us your feedback at professor@tataamc.com

19 The views expressed in these lessons are for information purposes only and do not construe to be of any investment, legal or taxation advice. The contents are topical in nature & held true at the time of creation of the lesson. They are not indicative of future market trends, nor is Tata Asset Management Limited attempting to predict the same. Reprinting any part of this presentation will be at your own risk and Tata Asset Management Limited will not be liable for the consequences of any such action. Disclaimer

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