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police guard a national bank branch.","description":null,"title":"4386566455_0980e645af_o","credit":"\u003ca href=\"https://www.flickr.com/photos/0742/4386566455\">underclassrising.net/flickr\u003c/a>","status":"inherit","fetchFailed":false,"isLoading":false}},"audioPlayerReducer":{"postId":"stream_live"},"authorsReducer":{"jessengebretson":{"type":"authors","id":"8628","meta":{"index":"authors_1716337520","id":"8628","found":true},"name":"Jess Engebretson","firstName":"Jess","lastName":"Engebretson","slug":"jessengebretson","email":"jess.engebretson@gmail.com","display_author_email":false,"staff_mastheads":[],"title":null,"bio":"Jess Engebretson is a radio producer from Virginia.","avatar":"https://secure.gravatar.com/avatar/82da81d5865f1a046c91ee925e616266?s=600&d=blank&r=g","twitter":null,"facebook":null,"instagram":null,"linkedin":null,"sites":[{"site":"lowdown","roles":["contributor"]}],"headData":{"title":"Jess Engebretson | KQED","description":null,"ogImgSrc":"https://secure.gravatar.com/avatar/82da81d5865f1a046c91ee925e616266?s=600&d=blank&r=g","twImgSrc":"https://secure.gravatar.com/avatar/82da81d5865f1a046c91ee925e616266?s=600&d=blank&r=g"},"isLoading":false,"link":"/author/jessengebretson"}},"breakingNewsReducer":{},"campaignFinanceReducer":{},"pagesReducer":{},"postsReducer":{"stream_live":{"type":"live","id":"stream_live","audioUrl":"https://streams.kqed.org/kqedradio","title":"Live Stream","excerpt":"Live Stream information currently unavailable.","link":"/radio","featImg":"","label":{"name":"KQED Live","link":"/"}},"stream_kqedNewscast":{"type":"posts","id":"stream_kqedNewscast","audioUrl":"https://www.kqed.org/.stream/anon/radio/RDnews/newscast.mp3?_=1","title":"KQED Newscast","featImg":"","label":{"name":"88.5 FM","link":"/"}},"lowdown_19052":{"type":"posts","id":"lowdown_19052","meta":{"index":"posts_1716263798","site":"lowdown","id":"19052","score":null,"sort":[1437173765000]},"parent":0,"labelTerm":{"site":"lowdown"},"blocks":[],"publishDate":1437173765,"format":"standard","disqusTitle":"The Greek Debt Crisis Explained","title":"The Greek Debt Crisis Explained","headTitle":"The Lowdown | KQED News","content":"\u003cp>You’ve probably heard a whole lot of “Greek” references in the news recently: Greek debt, Greek bailout, Greek politicians, and even some strange new \u003ca href=\"http://www.merriam-webster.com/dictionary/portmanteau\">portmanteaus\u003c/a> like “Grexit” and “Greferendum.”\u003c!--more-->\u003c/p>\n\u003cp>If it’s all just Greek to you (sorry, had to say it just once) and you don’t know the IMF from the ECB, or what the heck austerity is, or how Greece got into this mess in the first place -- fear not, we’re here to help (or at least try).\u003c/p>\n\u003cp>Here’s the skinny:\u003c/p>\n\u003ch4>What exactly is the problem?\u003c/h4>\n\u003cp>In a nutshell, Greece is broke. The country’s in the middle of a debt crisis. Its government owes about 325 billion euros (roughly $350 billion U.S.)-- 180% of its total GDP -- to different creditors: other European countries, the International Monetary Fund and various other banks and investors. The government is running out of cash and doesn’t have enough to pay back what it owes. Last month, it failed to make a 1.7 billion euro repayment to the IMF, and it’s unclear if it’ll be able to pay off other big bills due later this month. It also doesn’t have enough money for other pretty important things too, like say, paying government employees or building roads and schools.\u003c/p>\n\u003cp>https://youtu.be/EifedkdrqWo\u003c/p>\n\u003ch4>How long has this been going on?\u003c/h4>\n\u003cp>The crisis started in 2009. Since then, the European Commission, the European Central Bank and the IMF (the so-called “troika”) have bailed Greece out twice. In 2010 Greece got 110 billion euros and in return committed to making tough reforms to address the root causes of the crisis. Two years later, Greece was still struggling to pay its debts. So the troika offered a second bailout of 130 billion euros -- again, spread over several years, and coupled with austerity measures (more on that in a minute).\u003c/p>\n\u003ch4>How did Greece get into such a mess?\u003c/h4>\n\u003cp>It’s a long, complicated saga. If you’ve got an hour to spare, \u003ca href=\"http://www.thisamericanlife.org/radio-archives/episode/455/continental-breakup\">This American Life\u003c/a> did an excellent backgrounder on the crisis.\u003c/p>\n\u003cp>[ad fullwidth]\u003c/p>\n\u003cp>\u003ciframe src=\"https://w.soundcloud.com/player/?url=https%3A//api.soundcloud.com/tracks/35549669&color=ff5500&auto_play=false&hide_related=false&show_comments=true&show_user=true&show_reposts=false\" width=\"100%\" height=\"166\" frameborder=\"no\" scrolling=\"no\">\u003c/iframe>\u003c/p>\n\u003cp>The trouble began in 2002, when 12 European Union nations ditched their national currencies in exchange for the euro. Collectively known as the “eurozone,” some of these countries, like Germany, had much stronger economies than others, like Greece. But because of shared currency, their economies were (and continue to be) tied together. To keep any one country in the group from jeopardizing the economic strength of the others, they all agreed to meet certain economic criteria.\u003c/p>\n\u003cp>For Greece, this was great. Suddenly, investors were much more willing to lend the country money -- and on better financial terms. Those investors were no longer thinking “I’m lending to Greece,” but rather “I’m lending to a eurozone country, backed up by all the other eurozone countries.”\u003c/p>\n\u003cp>Greece was suddenly able to borrow a lot more money. Its government used it, in part, to hire more service workers, pay out longstanding bonuses and build much needed infrastructure.\u003c/p>\n\u003cp>Then, two bad things happened:\u003c/p>\n\u003cp>One was the 2008 global financial crisis, which hit Greece’s economy particularly hard. The second was the revelation that the Greek government had, for years, lied to other eurozone countries about its economic indicators. Its 2009 deficit -- which, according to eurozone rules, was supposed to be under 3% of its GDP -- was actually 16%. The total government debt was also much higher than had been reported. Greece no longer looked so good in the eyes of its international creditors, and loan offers became to dry up.\u003c/p>\n\u003cp>As Greece’s economy continued to shrink, its bills kept piling up. And, that’s essentially where the country has been since 2009: struggling to pay back the money it borrowed and living under very tight conditions.\u003c/p>\n\u003ch4>If this has been going on for years, why am I hearing so much about it now?\u003c/h4>\n\u003cp>This January (2015), the radical left-wing Syriza party gained a majority in the Greek Parliament, and its leader Alexis Tsipras, became prime minister.\u003c/p>\n\u003cp>Syriza opposes the terms of the second bailout deal, and rose to power on a promise to nix the old deal and renegotiate. And that’s really why Greece starting popping up in the news again this spring: because the new government has been going back and forth with the troika, trying to change the terms of the 2012 deal.\u003c/p>\n\u003ch4>If a bailout deal gives Greece more money, why would it want to renegotiate?\u003c/h4>\n\u003cp>It's true that a bailout gives Greece more money. But in return for loans, the government has had to make some really tough reforms to reduce its deficit. These are called “austerity measures”: reducing government spending and services and/or increasing taxes. Over the past few years, the other eurozone countries (led by Germany) have essentially said to Greece, “Okay, we’ll loan you some money to get you through this crisis, but in return, you’d better make some changes that show us you’re serious about reducing your debt.”\u003c/p>\n\u003cp>So over the past few years, the government has imposed lots of austerity measures, including major cuts in government salaries and positions, pensions, health and defense spending, and the minimum wage. These policies would be a tough sell to voters at the best of times -- but they’re especially painful for a country in the middle of an already mounting economic crisis.\u003c/p>\n\u003ch4>So how bad is this for average Greek folk?\u003c/h4>\n\u003cp>It’s been devastating. Unemployment is more than 25% nationwide, and much higher for young people. Many of those who can leave the country, do. Those who can’t have been pulling their savings out of banks -- to such a degree that the government recently had to temporarily shut them down. Daily ATM withdrawals are limited to 60 euros (about $65), and any businesses will only accept payment in cash. It’s not unreasonable to compare Greece’s current crisis to the Great Depression that almost destroyed America’s economy nearly eight decades ago; the European Union is even considering humanitarian aid for Greece.\u003c/p>\n\u003ch4>What’s the alternative to austerity?\u003c/h4>\n\u003cp>We mentioned that the new Syriza government wanted to renegotiate the last bailout. Long story short, they failed. Greece basically has no leverage at this point—it can’t pressure its creditors to be more flexible. If Greece wants loans from the eurozone, it has to play by their rules. And that means austerity.\u003c/p>\n\u003cp>The alternative is for Greece to walk away from the bailout. In that case, the government will run out of money. That would essentially force Greece to leave the eurozone and return to its old currency, the drachma. It could then print more money to help pay debts and increase tourism and exports -- something that other countries have done in the past to deal with similar crises. (As long as it’s on the euro, it can’t print more money because monetary policy for eurozone countries is controlled by the European Central Bank -- not by the individual countries.) But converting back to the drachma would also introduce a whole new set of issues, including the threat of rampant inflation.\u003c/p>\n\u003ch4>What would happen if Greece ditched the euro?\u003c/h4>\n\u003cp>We really don’t know, because no country has ever left the eurozone. Some people think a “Grexit” would be \u003ca href=\"http://www.ibtimes.com/greece-debt-crisis-2015-whats-so-bad-about-grexit-1814412\">a major blow\u003c/a> to both Greece and the eurozone, while \u003ca href=\"http://www.businessinsider.com/grexit-if-greece-leaves-the-euro-2015-2\">others\u003c/a> \u003ca href=\"http://www.ft.com/intl/cms/s/0/5330b2a8-f00e-11e4-bb88-00144feab7de.html#axzz3ftfi8N6q\">argue\u003c/a> that the effects would be more moderate – possibly even a good thing in the long run. The immediate effects would hit Greece hard, though, which is one reason the government has (so far) agreed to stick with the bailout and austerity option.\u003c/p>\n\u003ch4>What was that referendum I heard about a couple weeks ago?\u003c/h4>\n\u003cp>On June 27, Prime Minister Alexis Tsipras announced that the country would \u003ca href=\"http://www.wsj.com/articles/greek-voters-to-decide-on-convoluted-bailout-question-july-5-1435691134\">hold a referendum\u003c/a> on whether to accept the bailout conditions offered by the troika. Greek citizens dutifully trooped to the polls -- and voted against the bailout conditions in a referendum that demonstrated just how unpopular austerity is.\u003c/p>\n\u003cp>At the time, European leaders warned that a “no” vote could mean a Greek exit from the eurozone. But Prime Minister Tsipras urged voters to oppose it, presumably thinking that a “no” vote would give him leverage with eurozone negotiators, allowing him to strike a deal with fewer austerity measures.\u003c/p>\n\u003cp>Neither of those things happened, though. Instead, negotiators on both sides essentially ignored the referendum. Greece is now on track for a \u003ca href=\"http://money.cnn.com/2015/07/12/news/economy/greece-bailout-europe-conditions/\">third bailout\u003c/a>, and more austerity. Ugh.\u003c/p>\n\u003ch4>What’s the deal with the new bailout?\u003c/h4>\n\u003cp>The details are still being negotiated, but Greece will likely receive a loan of about 86 billion euros. Greece will also get a 7 billion euro “bridge” loan to help it repay its immediate debts. In return, the government will raise taxes, cut pensions, and sell off government assets to pay down existing debt. This Wednesday (July 15), the Greek Parliament passed the first of those new reforms. As a result, longer-term negotiations on the third bailout are set to move forward.\u003c/p>\n\u003cp>So … stay tuned\u003c/p>\n\u003ch4>Further reading\u003c/h4>\n\u003cp>\u003cstrong>Background sources\u003c/strong>\u003c/p>\n\u003cp>\u003ca href=\"http://ec.europa.eu/economy_finance/economic_governance/sgp/index_en.htm\">http://ec.europa.eu/economy_finance/economic_governance/sgp/index_en.htm\u003c/a>\u003c/p>\n\u003cp>\u003ca href=\"http://www.cnn.com/2015/07/13/europe/how-greece-reached-this-point/\">http://www.cnn.com/2015/07/13/europe/how-greece-reached-this-point/\u003c/a>\u003c/p>\n\u003cp>\u003ca href=\"http://www.vox.com/2015/6/30/8867939/greece-economic-crisis\">http://www.vox.com/2015/6/30/8867939/greece-economic-crisis\u003c/a>\u003c/p>\n\u003cp>\u003ca href=\"http://money.cnn.com/2015/07/13/news/economy/greece-deal-full-text/index.html?iid=EL\">http://money.cnn.com/2015/07/13/news/economy/greece-deal-full-text/index.html?iid=EL\u003c/a>\u003c/p>\n\u003cp>\u003ca href=\"http://www.washingtonpost.com/blogs/wonkblog/wp/2015/07/05/as-greece-votes-heres-everything-you-need-to-know-about-the-nations-crisis/\">http://www.washingtonpost.com/blogs/wonkblog/wp/2015/07/05/as-greece-votes-heres-everything-you-need-to-know-about-the-nations-crisis/\u003c/a>\u003c/p>\n\u003cp>\u003ca href=\"http://www.telegraph.co.uk/finance/economics/11705917/Greece-crisis-What-happens-next-And-how-much-money-does-Greece-owe.html\">http://www.telegraph.co.uk/finance/economics/11705917/Greece-crisis-What-happens-next-And-how-much-money-does-Greece-owe.html\u003c/a>\u003c/p>\n\u003cp>\u003ca href=\"http://www.economist.com/blogs/economist-explains/2015/06/economist-explains-5\">http://www.economist.com/blogs/economist-explains/2015/06/economist-explains-5\u003c/a>\u003c/p>\n\u003cp>\u003ca href=\"http://www.thisamericanlife.org/radio-archives/episode/455/continental-breakup\">http://www.thisamericanlife.org/radio-archives/episode/455/continental-breakup\u003c/a>\u003c/p>\n\u003cp>\u003ca href=\"http://www.bbc.com/news/world-europe-33311405\">http://www.bbc.com/news/world-europe-33311405\u003c/a>\u003c/p>\n\u003cp>\u003cstrong>Analysis/Commentary\u003c/strong>\u003c/p>\n\u003cp>\u003ca href=\"http://www.wsj.com/articles/greek-voters-to-decide-on-convoluted-bailout-question-july-5-1435691134\">http://www.wsj.com/articles/greek-voters-to-decide-on-convoluted-bailout-question-july-5-1435691134\u003c/a>\u003c/p>\n\u003cp>\u003ca href=\"http://www.economist.com/blogs/buttonwood/2015/05/fiscal-policy\">http://www.economist.com/blogs/buttonwood/2015/05/fiscal-policy\u003c/a>\u003c/p>\n\u003cp>\u003ca href=\"http://www.forbes.com/sites/timworstall/2015/02/26/the-reason-austerity-in-greece-didnt-work/\">http://www.forbes.com/sites/timworstall/2015/02/26/the-reason-austerity-in-greece-didnt-work/\u003c/a>\u003c/p>\n\u003cp>\u003ca href=\"http://www.nytimes.com/2015/06/29/opinion/paul-krugman-greece-over-the-brink.html\">http://www.nytimes.com/2015/06/29/opinion/paul-krugman-greece-over-the-brink.html\u003c/a>\u003c/p>\n\u003cp>\u003ca href=\"http://www.cepr.net/publications/op-eds-columns/greece-will-likely-begin-recovery-this-year-is-austerity-working\">http://www.cepr.net/publications/op-eds-columns/greece-will-likely-begin-recovery-this-year-is-austerity-working\u003c/a>\u003c/p>\n\u003cp>\u003ca href=\"http://www.vox.com/2015/7/13/8949925/greece-syriza\">http://www.vox.com/2015/7/13/8949925/greece-syriza\u003c/a>\u003c/p>\n\u003cp>\u003ca href=\"http://www.businessinsider.com/grexit-if-greece-leaves-the-euro-2015-2\">http://www.businessinsider.com/grexit-if-greece-leaves-the-euro-2015-2\u003c/a>\u003c/p>\n\u003cp>[ad floatright]\u003c/p>\n\u003cp>\u003ca href=\"http://www.bbc.com/news/business-33327900\">http://www.bbc.com/news/business-33327900\u003c/a>\u003c/p>\n\n","disqusIdentifier":"19052 http://ww2.kqed.org/lowdown/?p=19052","disqusUrl":"https://ww2.kqed.org/lowdown/2015/07/17/confused-about-the-greek-economic-crisis-heres-whats-going-on/","stats":{"hasVideo":false,"hasChartOrMap":true,"hasAudio":true,"hasPolis":false,"wordCount":1806,"hasGoogleForm":false,"hasGallery":false,"hasHearkenModule":false,"iframeSrcs":["https://w.soundcloud.com/player/"],"paragraphCount":30},"modified":1443914781,"excerpt":"Making sense of the Greek meltdown.","headData":{"twImgId":"","twTitle":"","ogTitle":"","ogImgId":"","twDescription":"","description":"Making sense of the Greek meltdown.","title":"The Greek Debt Crisis Explained | KQED","ogDescription":"","schema":{"@context":"http://schema.org","@type":"Article","headline":"The Greek Debt Crisis Explained","datePublished":"2015-07-17T15:56:05-07:00","dateModified":"2015-10-03T16:26:21-07:00","image":"https://cdn.kqed.org/wp-content/uploads/2020/02/KQED-OG-Image@1x.png"}},"guestAuthors":[],"slug":"confused-about-the-greek-economic-crisis-heres-whats-going-on","status":"publish","path":"/lowdown/19052/confused-about-the-greek-economic-crisis-heres-whats-going-on","audioTrackLength":null,"parsedContent":[{"type":"contentString","content":"\u003cdiv class=\"post-body\">\u003cp>\u003cp>You’ve probably heard a whole lot of “Greek” references in the news recently: Greek debt, Greek bailout, Greek politicians, and even some strange new \u003ca href=\"http://www.merriam-webster.com/dictionary/portmanteau\">portmanteaus\u003c/a> like “Grexit” and “Greferendum.”\u003c!--more-->\u003c/p>\n\u003cp>If it’s all just Greek to you (sorry, had to say it just once) and you don’t know the IMF from the ECB, or what the heck austerity is, or how Greece got into this mess in the first place -- fear not, we’re here to help (or at least try).\u003c/p>\n\u003cp>Here’s the skinny:\u003c/p>\n\u003ch4>What exactly is the problem?\u003c/h4>\n\u003cp>In a nutshell, Greece is broke. The country’s in the middle of a debt crisis. Its government owes about 325 billion euros (roughly $350 billion U.S.)-- 180% of its total GDP -- to different creditors: other European countries, the International Monetary Fund and various other banks and investors. The government is running out of cash and doesn’t have enough to pay back what it owes. Last month, it failed to make a 1.7 billion euro repayment to the IMF, and it’s unclear if it’ll be able to pay off other big bills due later this month. It also doesn’t have enough money for other pretty important things too, like say, paying government employees or building roads and schools.\u003c/p>\u003c/p>\u003cp>\u003cspan class='utils-parseShortcode-shortcodes-__youtubeShortcode__embedYoutube'>\n \u003cspan class='utils-parseShortcode-shortcodes-__youtubeShortcode__embedYoutubeInside'>\n \u003ciframe\n loading='lazy'\n class='utils-parseShortcode-shortcodes-__youtubeShortcode__youtubePlayer'\n type='text/html'\n src='//www.youtube.com/embed/EifedkdrqWo'\n title='//www.youtube.com/embed/EifedkdrqWo'\n allowfullscreen='true'\n style='border:0;'>\u003c/iframe>\n \u003c/span>\n \u003c/span>\u003c/p>\u003cp>\u003ch4>How long has this been going on?\u003c/h4>\n\u003cp>The crisis started in 2009. Since then, the European Commission, the European Central Bank and the IMF (the so-called “troika”) have bailed Greece out twice. In 2010 Greece got 110 billion euros and in return committed to making tough reforms to address the root causes of the crisis. Two years later, Greece was still struggling to pay its debts. So the troika offered a second bailout of 130 billion euros -- again, spread over several years, and coupled with austerity measures (more on that in a minute).\u003c/p>\n\u003ch4>How did Greece get into such a mess?\u003c/h4>\n\u003cp>It’s a long, complicated saga. If you’ve got an hour to spare, \u003ca href=\"http://www.thisamericanlife.org/radio-archives/episode/455/continental-breakup\">This American Life\u003c/a> did an excellent backgrounder on the crisis.\u003c/p>\n\u003cp>\u003c/p>\u003c/div>","attributes":{"named":{},"numeric":[]}},{"type":"component","content":"","name":"ad","attributes":{"named":{"label":"fullwidth"},"numeric":["fullwidth"]}},{"type":"contentString","content":"\u003cdiv class=\"post-body\">\u003cp>\u003c/p>\n\u003cp>\u003ciframe src=\"https://w.soundcloud.com/player/?url=https%3A//api.soundcloud.com/tracks/35549669&color=ff5500&auto_play=false&hide_related=false&show_comments=true&show_user=true&show_reposts=false\" width=\"100%\" height=\"166\" frameborder=\"no\" scrolling=\"no\">\u003c/iframe>\u003c/p>\n\u003cp>The trouble began in 2002, when 12 European Union nations ditched their national currencies in exchange for the euro. Collectively known as the “eurozone,” some of these countries, like Germany, had much stronger economies than others, like Greece. But because of shared currency, their economies were (and continue to be) tied together. To keep any one country in the group from jeopardizing the economic strength of the others, they all agreed to meet certain economic criteria.\u003c/p>\n\u003cp>For Greece, this was great. Suddenly, investors were much more willing to lend the country money -- and on better financial terms. Those investors were no longer thinking “I’m lending to Greece,” but rather “I’m lending to a eurozone country, backed up by all the other eurozone countries.”\u003c/p>\n\u003cp>Greece was suddenly able to borrow a lot more money. Its government used it, in part, to hire more service workers, pay out longstanding bonuses and build much needed infrastructure.\u003c/p>\n\u003cp>Then, two bad things happened:\u003c/p>\n\u003cp>One was the 2008 global financial crisis, which hit Greece’s economy particularly hard. The second was the revelation that the Greek government had, for years, lied to other eurozone countries about its economic indicators. Its 2009 deficit -- which, according to eurozone rules, was supposed to be under 3% of its GDP -- was actually 16%. The total government debt was also much higher than had been reported. Greece no longer looked so good in the eyes of its international creditors, and loan offers became to dry up.\u003c/p>\n\u003cp>As Greece’s economy continued to shrink, its bills kept piling up. And, that’s essentially where the country has been since 2009: struggling to pay back the money it borrowed and living under very tight conditions.\u003c/p>\n\u003ch4>If this has been going on for years, why am I hearing so much about it now?\u003c/h4>\n\u003cp>This January (2015), the radical left-wing Syriza party gained a majority in the Greek Parliament, and its leader Alexis Tsipras, became prime minister.\u003c/p>\n\u003cp>Syriza opposes the terms of the second bailout deal, and rose to power on a promise to nix the old deal and renegotiate. And that’s really why Greece starting popping up in the news again this spring: because the new government has been going back and forth with the troika, trying to change the terms of the 2012 deal.\u003c/p>\n\u003ch4>If a bailout deal gives Greece more money, why would it want to renegotiate?\u003c/h4>\n\u003cp>It's true that a bailout gives Greece more money. But in return for loans, the government has had to make some really tough reforms to reduce its deficit. These are called “austerity measures”: reducing government spending and services and/or increasing taxes. Over the past few years, the other eurozone countries (led by Germany) have essentially said to Greece, “Okay, we’ll loan you some money to get you through this crisis, but in return, you’d better make some changes that show us you’re serious about reducing your debt.”\u003c/p>\n\u003cp>So over the past few years, the government has imposed lots of austerity measures, including major cuts in government salaries and positions, pensions, health and defense spending, and the minimum wage. These policies would be a tough sell to voters at the best of times -- but they’re especially painful for a country in the middle of an already mounting economic crisis.\u003c/p>\n\u003ch4>So how bad is this for average Greek folk?\u003c/h4>\n\u003cp>It’s been devastating. Unemployment is more than 25% nationwide, and much higher for young people. Many of those who can leave the country, do. Those who can’t have been pulling their savings out of banks -- to such a degree that the government recently had to temporarily shut them down. Daily ATM withdrawals are limited to 60 euros (about $65), and any businesses will only accept payment in cash. It’s not unreasonable to compare Greece’s current crisis to the Great Depression that almost destroyed America’s economy nearly eight decades ago; the European Union is even considering humanitarian aid for Greece.\u003c/p>\n\u003ch4>What’s the alternative to austerity?\u003c/h4>\n\u003cp>We mentioned that the new Syriza government wanted to renegotiate the last bailout. Long story short, they failed. Greece basically has no leverage at this point—it can’t pressure its creditors to be more flexible. If Greece wants loans from the eurozone, it has to play by their rules. And that means austerity.\u003c/p>\n\u003cp>The alternative is for Greece to walk away from the bailout. In that case, the government will run out of money. That would essentially force Greece to leave the eurozone and return to its old currency, the drachma. It could then print more money to help pay debts and increase tourism and exports -- something that other countries have done in the past to deal with similar crises. (As long as it’s on the euro, it can’t print more money because monetary policy for eurozone countries is controlled by the European Central Bank -- not by the individual countries.) But converting back to the drachma would also introduce a whole new set of issues, including the threat of rampant inflation.\u003c/p>\n\u003ch4>What would happen if Greece ditched the euro?\u003c/h4>\n\u003cp>We really don’t know, because no country has ever left the eurozone. Some people think a “Grexit” would be \u003ca href=\"http://www.ibtimes.com/greece-debt-crisis-2015-whats-so-bad-about-grexit-1814412\">a major blow\u003c/a> to both Greece and the eurozone, while \u003ca href=\"http://www.businessinsider.com/grexit-if-greece-leaves-the-euro-2015-2\">others\u003c/a> \u003ca href=\"http://www.ft.com/intl/cms/s/0/5330b2a8-f00e-11e4-bb88-00144feab7de.html#axzz3ftfi8N6q\">argue\u003c/a> that the effects would be more moderate – possibly even a good thing in the long run. The immediate effects would hit Greece hard, though, which is one reason the government has (so far) agreed to stick with the bailout and austerity option.\u003c/p>\n\u003ch4>What was that referendum I heard about a couple weeks ago?\u003c/h4>\n\u003cp>On June 27, Prime Minister Alexis Tsipras announced that the country would \u003ca href=\"http://www.wsj.com/articles/greek-voters-to-decide-on-convoluted-bailout-question-july-5-1435691134\">hold a referendum\u003c/a> on whether to accept the bailout conditions offered by the troika. Greek citizens dutifully trooped to the polls -- and voted against the bailout conditions in a referendum that demonstrated just how unpopular austerity is.\u003c/p>\n\u003cp>At the time, European leaders warned that a “no” vote could mean a Greek exit from the eurozone. But Prime Minister Tsipras urged voters to oppose it, presumably thinking that a “no” vote would give him leverage with eurozone negotiators, allowing him to strike a deal with fewer austerity measures.\u003c/p>\n\u003cp>Neither of those things happened, though. Instead, negotiators on both sides essentially ignored the referendum. Greece is now on track for a \u003ca href=\"http://money.cnn.com/2015/07/12/news/economy/greece-bailout-europe-conditions/\">third bailout\u003c/a>, and more austerity. Ugh.\u003c/p>\n\u003ch4>What’s the deal with the new bailout?\u003c/h4>\n\u003cp>The details are still being negotiated, but Greece will likely receive a loan of about 86 billion euros. Greece will also get a 7 billion euro “bridge” loan to help it repay its immediate debts. In return, the government will raise taxes, cut pensions, and sell off government assets to pay down existing debt. This Wednesday (July 15), the Greek Parliament passed the first of those new reforms. As a result, longer-term negotiations on the third bailout are set to move forward.\u003c/p>\n\u003cp>So … stay tuned\u003c/p>\n\u003ch4>Further reading\u003c/h4>\n\u003cp>\u003cstrong>Background sources\u003c/strong>\u003c/p>\n\u003cp>\u003ca href=\"http://ec.europa.eu/economy_finance/economic_governance/sgp/index_en.htm\">http://ec.europa.eu/economy_finance/economic_governance/sgp/index_en.htm\u003c/a>\u003c/p>\n\u003cp>\u003ca href=\"http://www.cnn.com/2015/07/13/europe/how-greece-reached-this-point/\">http://www.cnn.com/2015/07/13/europe/how-greece-reached-this-point/\u003c/a>\u003c/p>\n\u003cp>\u003ca href=\"http://www.vox.com/2015/6/30/8867939/greece-economic-crisis\">http://www.vox.com/2015/6/30/8867939/greece-economic-crisis\u003c/a>\u003c/p>\n\u003cp>\u003ca href=\"http://money.cnn.com/2015/07/13/news/economy/greece-deal-full-text/index.html?iid=EL\">http://money.cnn.com/2015/07/13/news/economy/greece-deal-full-text/index.html?iid=EL\u003c/a>\u003c/p>\n\u003cp>\u003ca href=\"http://www.washingtonpost.com/blogs/wonkblog/wp/2015/07/05/as-greece-votes-heres-everything-you-need-to-know-about-the-nations-crisis/\">http://www.washingtonpost.com/blogs/wonkblog/wp/2015/07/05/as-greece-votes-heres-everything-you-need-to-know-about-the-nations-crisis/\u003c/a>\u003c/p>\n\u003cp>\u003ca href=\"http://www.telegraph.co.uk/finance/economics/11705917/Greece-crisis-What-happens-next-And-how-much-money-does-Greece-owe.html\">http://www.telegraph.co.uk/finance/economics/11705917/Greece-crisis-What-happens-next-And-how-much-money-does-Greece-owe.html\u003c/a>\u003c/p>\n\u003cp>\u003ca href=\"http://www.economist.com/blogs/economist-explains/2015/06/economist-explains-5\">http://www.economist.com/blogs/economist-explains/2015/06/economist-explains-5\u003c/a>\u003c/p>\n\u003cp>\u003ca href=\"http://www.thisamericanlife.org/radio-archives/episode/455/continental-breakup\">http://www.thisamericanlife.org/radio-archives/episode/455/continental-breakup\u003c/a>\u003c/p>\n\u003cp>\u003ca href=\"http://www.bbc.com/news/world-europe-33311405\">http://www.bbc.com/news/world-europe-33311405\u003c/a>\u003c/p>\n\u003cp>\u003cstrong>Analysis/Commentary\u003c/strong>\u003c/p>\n\u003cp>\u003ca href=\"http://www.wsj.com/articles/greek-voters-to-decide-on-convoluted-bailout-question-july-5-1435691134\">http://www.wsj.com/articles/greek-voters-to-decide-on-convoluted-bailout-question-july-5-1435691134\u003c/a>\u003c/p>\n\u003cp>\u003ca href=\"http://www.economist.com/blogs/buttonwood/2015/05/fiscal-policy\">http://www.economist.com/blogs/buttonwood/2015/05/fiscal-policy\u003c/a>\u003c/p>\n\u003cp>\u003ca href=\"http://www.forbes.com/sites/timworstall/2015/02/26/the-reason-austerity-in-greece-didnt-work/\">http://www.forbes.com/sites/timworstall/2015/02/26/the-reason-austerity-in-greece-didnt-work/\u003c/a>\u003c/p>\n\u003cp>\u003ca href=\"http://www.nytimes.com/2015/06/29/opinion/paul-krugman-greece-over-the-brink.html\">http://www.nytimes.com/2015/06/29/opinion/paul-krugman-greece-over-the-brink.html\u003c/a>\u003c/p>\n\u003cp>\u003ca href=\"http://www.cepr.net/publications/op-eds-columns/greece-will-likely-begin-recovery-this-year-is-austerity-working\">http://www.cepr.net/publications/op-eds-columns/greece-will-likely-begin-recovery-this-year-is-austerity-working\u003c/a>\u003c/p>\n\u003cp>\u003ca href=\"http://www.vox.com/2015/7/13/8949925/greece-syriza\">http://www.vox.com/2015/7/13/8949925/greece-syriza\u003c/a>\u003c/p>\n\u003cp>\u003ca href=\"http://www.businessinsider.com/grexit-if-greece-leaves-the-euro-2015-2\">http://www.businessinsider.com/grexit-if-greece-leaves-the-euro-2015-2\u003c/a>\u003c/p>\n\u003cp>\u003c/p>\u003c/div>","attributes":{"named":{},"numeric":[]}},{"type":"component","content":"","name":"ad","attributes":{"named":{"label":"floatright"},"numeric":["floatright"]}},{"type":"contentString","content":"\u003cdiv class=\"post-body\">\u003cp>\u003c/p>\n\u003cp>\u003ca href=\"http://www.bbc.com/news/business-33327900\">http://www.bbc.com/news/business-33327900\u003c/a>\u003c/p>\n\n\u003c/div>\u003c/p>","attributes":{"named":{},"numeric":[]}}],"link":"/lowdown/19052/confused-about-the-greek-economic-crisis-heres-whats-going-on","authors":["8628"],"categories":["lowdown_509","lowdown_2370"],"tags":["lowdown_2444","lowdown_2337","lowdown_2443"],"featImg":"lowdown_19059","label":"lowdown"}},"programsReducer":{"possible":{"id":"possible","title":"Possible","info":"Possible is hosted by entrepreneur Reid Hoffman and writer Aria Finger. 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