Question

Lets use our imagination to explore differing perspectives on the crises in Europe and the United States: Try to put yourself in the position of a Greek worker, let's say a nurse or a clerk. How do you feel about demands on your government from the European Union and European Central bank that you pay and pension be dramatically cut? Or, perhaps there are recommendations that your job be cut. Provide a brief description. Compare and contrast this perspective with the perspective of a German worker, let's say an autoworker or a technology company. How do you feel about demands on your government to bail out the Greek economy?

Next, try to put yourself in the position who has lost his or her job in the financial crisis, say in 2009, and, consequently, can no longer afford mortgage payments, let's say an autoworker, a construction worker or other worker, or someone working in the financial industry. How do you feel about legislation that like TARP and ARRA? Be specific in your response.

Answer 1

Greek Debt Crisis: How it began

Greece had adopted Euro alongwith other European countries, except UK and Denmark, in January 1999. After, Eurozone was formed Greece, which was earlier considered a third world country, was seen as a much stronger nation by the investors who began lending to it quite aggressively. Given a high level of supply of borrowed funds, Greece began taking a lot of loans from the investors, globally, which eventually built up to a debt to GDP ratio of as high as 179%.

Investors had developed this misconception that since Greece was a part of the Eurozone it would be safeguarded by other fellow members if ever a financial emergency was to arise. On the contrary, when in 2009, Greece announced a budget deficit of 12.9% of GDP (which was ~4 times EU's 3% limit), Germany and other Eurozone nations did not simply agree to bail out Greece.

However, as the Greece announced that it might default, European Union and International Monetary Fund funded a total of Euro 240 billion as bailout with some stringent conditions, which had a direct impact on the civilians.

Perspective of a Greek Worker

As a Greek worker, I would feel the burden of the austerity measures which have been imposed multiple times since the crisis which began almost a decade back. I would feel very unsafe and insecure living in Greece and would want to move my base in financially sound economy. These measures included:

1. Increase in taxation (including VAT and corporate tax), solidarity levy, etc to reduce government's fiscal deficit

2. Increased pension contributions from the workers

3. Public sector wage cuts and bulk lay offs

4. Defence, Health, Education and other welfare spending reduction, reduced subsidies

5. Social Security benefits cut, loss of pension

6. Privatization of monopolies including Port authorities, Telecom, Petroleum refiner, Electricity transmission, airports etc, to raise money

I would plan a move outside Greece, since it seems to be in ruins and is wiping out my savings with no incentive for living.

Perspective of a German Worker

German economy was severely impacted by the Greek crisis. There was a major economic downturn in entire Europe. In particular, Germany's manufacturing and private sector hit an all time low. German economy draws a vast income from its export that fell sharply further resulting in unemployment. As a result, German economy was also impacted by the austerity measures mentioned above, which were also imposed on the rest of th eEuropean nations as well.

As a german worker, I would feel extremely furious that Greek workers are protesting against EU and IMF's austerity measures, given their economy is facing a hit for Greece's economic turmoil. Other European nations had no option but to bailout Greece to avoid its default and Grexit (Greece's exit from Eurozone), which would have a severely negative impact on Euro and could lead to an economic crash. This could have further lead to British exitting Euro, which would seriously impact Germany not just economically but politically as well. Most of its export revenue for the automobile industry is driven by Britain and this is a move it can't afford.

As an automobile worker, I would abide by the austerity measures, given it is a cost I would have to pay for my financial security.

USA Financial Crisis: Impact of TARP and ARRA

TARP (Troubled Asset Relief Program) and ARRA (American recovery and Reinvestment Act) were both american goverment's legislations to provide a stimulus to the economy in the face of the downturn. Through these acts, USA government bought toxic assets and equity from financial institutions to induce liquidity into the economy. If I were unemployed, I would only be measely helped by these legislations and would expect a more robust financial program like a severance pay or employment opportunity. I would not be impacted by these acts, much.