Inside Europe's Worst Economy | Ground Report by Dhruv Rathee - YouTube

Greetings, friends!

Today, I am here at the capital of Greece, Athens.

A city- a country that has been through the worst economic crisis over the last 10 years

Greece is on the verge of default tonight

Greece is the latest European economy to be on life support

Greece is expected to default

For now it eases some worries of the global economy

I'd put the Greek economic crisis at the second spot after Venezuela economic crisis

Why did this happen? What were the reasons behind this?

How did it affect the residents here and how is it still affecting them today?

We will find about all of this in this ground report of today

Come, let us see

Let us begin our story right from the start

Greece joined the European Union in 1981

At that time, its debt to GDP ratio was 28%

That is the ratio of the country's debt to the country's GDP

28% is considered to be a good ratio

Infact, if the debt to GDP ratio is below 60%, then it is considered good

If it rises above that, then it is said that the country's debts are rising and its economy is floundering

Due to the mismanagement of the government that was in power here from 1981 to 1999

Its debt continued to rise

They spent more money than they had

The country's debt to GDP ratio reached 97% by 1999

The European Union had also launched the Euro currency in 1999

Greece, too wanted to become a part of the currency and wanted Euro notes to be used in their country too

But there was a criteria of the European Union

If any country wanted to use the Euro currency,

then they had to fulfill the Mastricht Criteria

That is, a country's debt to GDP ratio should be less than 60% if they wanted to use the Euro

They believed that otherwise, if a country had a lot of debts and it took up the Euro currency,

then it will not be able to handle it or bear it

It is obvious that Greece's debt to GDP ratio was not less than 60%

But despite that Greece accepted the Euro currency in 2001

How was it able to it is a scam in itself. It is a long tale in itself

Basically, Goldman Sachs is a company

They helped Greece conceal its debt and indulge in hyperbole

They kept the fact that their debts were so high hidden

And by fooling the European Union in a way, they adopted the Euro currency

But this did not have a lot of effect at that time

Infact, there was considerable growth until 2008

GDP per capita kept rising rapidly. The people too, were very happy

Employment was also on the rise. But so was the debt behind the doors

Then came the economic crisis in 2008

Its gonna be one of the watershed days in the nation's market's history

It was a manic Monday in the financial markets

We're in the midst of a serious financial crisis

and the federal government is responding with decisive action

Although the 2008 financial crisis had a negative influence on all countries,

but it had a disastrous effect on Greece especially, because

structural problems had already existed in its economy before

Furthermore, when their government changed in 2009,

the new Prime Minister revealed that the previous government had been fudging data on a large scale for years

They were saying that their budget deficit was 6.7%

But actually, it was crossing 15%

This maligned Greece's reputation across the world

Investors lost their trust and felt that they could not trust this country

and that they should withdraw their investments

The credit rating of this country was downgraded

And people were scared of investing their money

because they knew that the country could not afford to pay back

So overall, until 2010, the debts continued to rise and no one was ready to lend any money

The economy began to crash drastically

The Greek government's immediate priority is to convince the Europe that it can control its budget deficit

We are ready to take any necessary measure

in order to make sure that our goal of cutting our deficit by 4% in 2010

What effect did all of this have?

Greece used to be a 300 billion dollar economy in 2010

Its GDP growth rate stayed in the negatives for so many years

that by 2017, it fell to be a mere 200 billion dollar economy

Unemployment rate- which was 10% in 2010

It soared to 28% in 2013

At its peak, the Youth unemployment rate was 60%, that is,

60% of the youth living in this country were unemployed

The situations have somewhat improved today, but the youth unemployment rate stands at 40%

The people have been driven down on the streets literally and this is quite visible

One does not expect this from Greece which is a developed country in some ways

They educated people who could afford to leave, began to exit the country

because they saw no future in this country

Alongside, Greece was also going through an aging crisis

The fertility rate here was already very low

In 2005, Greece's population was at its peak- at 11 million

Today, this population has fallen to 10.5 million

and at the rate at which the population is declining in Greece,

it would have fallen to only 8 million by 2050

If so many people leave the country, what effect would it have on the ground level?

A lot of shops here have shut down

You will find a lot of buildings here in which construction has been stopped mid way

Buildings have been abandoned and the infrastructure is in a terrible state

Right behind me is one such Olympics stadium

which lies in decrepit as you can see

They've put up barriers to prevent anyone from going inside, but from the glimpse that we can catch of the interiors

it seems as if there's nothing inside. Everything is in a dilapidated condition and has been abandoned

Some cats have been residing here

And there are some similar buildings here

Some trash is lying around

Walking here seems like walking through a post apocalyptic situation as shown in the movies

This week, the Prime Minister "celebrated", if that's the word, 100 days in office

He told Greeks again, that they must change or sink

We know the severity of the crisis is unprecedented

And much worse than we originally thought

But this is not the time for minor steps

We need to be brave and decisive

What can a government do in such a situation to improve the economy?

and to reduce its debt?

Think about it

It is obvious that the money being spent by the government should be reduced as much as possible

and to increase the government's revenue as much as possible

so that they remain in surplus and pay back their debts

Basically, cut down spending and increase revenue

How can this practically be done?

Slash the pension and the social benefits being given out the people

And increase the tax- the VAT, the corporate tax upon the people

These are called "Austerity measures" in economics

You could ask that won't it anger the people if the government does this?

because basically, austerity measures involves taking money from the people

and giving it to the government to enable the government to pay off its debts

This does happen

The people do get angry- they were furious in Greece as well

And there were riots in 2015 due to these austerity measures

The people came out on the streets and resorted to rioting

Last week, demonstrators battled the police in downtown Athens

furious about tax hikes they've already suffered

as well as job losses and an overall pay cut of 20%

Unofficial estimates put the real number of unemployed people at 40%

This sign says that Greece should just walk away from its massive debt

and its an idea a lot of Greeks support

The danger is that it could trigger a catastrophic and global financial meltdown

Usually when a country faces such economic crisis, there is another option apart from austerity measures

that is to devalue its currency- to reduce the value of its currency by printing more notes

A lot of countries do this. It was done in Venezuela and Zimbabwe in extreme cases

that led to their currency becoming devalued very swiftly

It is debatable as how successful this solution is. But in the case of Greece,

this solution was not possible because its currency was Euro and Greece was not the sole country using Euro

There were other European countries (using it) as well

So it was not in the hands of Greece to devalue its currency so this solution was not available to Greece

Another interesting thing is that European Union too, did not want Greece's economy to flop

and for Greece to completely crash down as a country

because that would affect the reputation of the Euro currency

and experts believed that if Greece's economy did crash,

then it would negatively affect the rest of the European nations

In fact, a lot experts also believed that it could trigger another financial crisis worldwide

had Greece crashed completely

And this is why, even the European countries wanted Greece to become successful

and they were trying extremely hard to keep the economy of Greece from crashing

And they made bailout plans for this purpose

The country needs a 17 billion dollars emergency loan, mostly from European banks and governments

by the start of July just so it can pay the interest on its massive debt

The IMF and European Union gave the first bailout, worth 110 billion Euros, to Greece in 2019

This meant that this amount of money was given by both these organizations to Greece

and in return asked Greece to implement austerity measures in its country

But this bailout failed. This huge amount of money was indeed given but it could not revive Greece's economy

And so, a second bailout was given in 2012

and Greece was asked to implement even more austerity measures in exchange

By 2015, the residents here got so irate that they voted for an anti austerity party

who were promising to put a stop to austerity measures in their country

and were promising to hike the salaries and wages of the people

40 year old Syriza leader Alexis Tsipras

a politician who promises to restore dignity to the country that says is being humiliated

by the demands of its international lenders

Supporters cheered as he set to take charge in the country

Greece is turning up hate

Greece is leaving behind the catastrophic austerity

Syriza has convinced Greeks to reject austerity but the hard part will be to convince Europe as well

But by 206-17, this party too realized that Greece had no other option

that they had to implement austerity measures if they want to revive their economy

After this, a third bailout of 86 billion Euros was provided

and by 2018, its positive results finally began to dawn

Now, finally, the GDP growth rate of Greece's economy has slightly risen

The situation looks like its getting under control

But as of now, Greece owes around 280 billion Euros, in total, to the European Union and IMF

in exchange of all these bailouts

And Athens (Greece) has promised that by the t=year 2060,

they would stay in budget surplus and not run in deficit

But there's a visible hope for economic revival

After years of staying in the negative, Greece's GDP growth rate finally climbed into positive in 2017

and it has been predicted that it will remain 2.4% for 2019

And even if they continue to grow at this rate, by the time they reach 2030,

then the size of its economy will grow to become what it used to be in 2010

So overall, Greece endured a loss of 20 years because of this economic crisis

While revival, the tourism sector will play a very important part

because tourism is a major sector that drives Greece's economy

For example, this is a huge tourist attraction here

These monasteries that you can see behind me are a great tourist attraction

We can learn immensely from the story of Greece

First of all, I'd like to ask you

what lessons could you imbibe from this story which could serve as an inspiration for our country

and what are the things that our country should keep in mind

Write down in the comments below

In my opinion,

It is obvious that you will compare India's situation with that of Greece

There are some vast differences. For example,

Our country is in a slowdown while Greece was in a recession

And the second difference is that the debt to GDP ratio of our country is 68%

The condition is not as bad as Greece's

Not that massive debt has been accumulated

Another difference is that our country has its own currency

If any such situation does arise,

then the government would first try to devalue our currency

which can be done easily, unlike in the situation of Greece

But there is one important thing to observe in Greece

of which the Indian government should be mindful and that is

the way data fudging is done by the governments

And what bad a negative influence it exerts on the country's reputation

The Indian government does this too

Fudging the GDP data, showing fake data, concealing the unemployment data

The government of Greece did all of this as well

That is a very important lesson that we can learn from this economy

All of this is my opinion

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We will meet again in the next video

Thank you