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Greece has been in the news
because of its economic problems.What are these problems? Lets
understand
Understanding the Greece story
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Understanding the Greece story
To understand this lets imagine
Greece, Portugal, Spain, Italy,Ireland, Germany, France, are not
countries but brothers
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Interestingly, the brothers share a
common pool account namedEURO.
In short the brothers would
contribute into and spend from the
common account.
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Amongst the brothers, Greece
happened to be a spendthrift
person. In order to maintain his
lifestyle Greece had been on a
borrowing money from hisfriends
Understanding the Greece story
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While Greece had been spending
recklessly his earnings did not
kept pace with the same
Understanding the Greece story
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Hence he was on a perpetual
debt. To pay this debt he hadbeen taking additional debt from
his friends
Understanding the Greece story
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Understanding the Greece story
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 accountwith his brothers
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Hence he was on a perpetual debt.
Understanding the Greece story
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This poor track record of Greece
worried his brothers because theyshared the common family pool
account with him
Understanding the Greece story
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Understanding the Greece story
Because of Greeces spendingways, the credibility of the family
pool account suffered
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In order to protect the family name
the brothers had no choice but to
bail out Greece time and again.
Understanding the Greece story
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The brothers were unhappy withthis situation.
They felt that it is unfair for them
to bail out their spendthrift
brother Greece time and again.
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They threatened to take strict
action against Greece unless
he changed his spendthrift
attitude
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They ordered Greece to change
his lifestyle and lead a simpler life
thereby increasing his savings
to repay his debt
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This is the Greece story. The
family pool account is nothingbut the common currency EURO
Understanding the Greece story
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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
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The frugal lifestyle being imposed
are the economic reforms forausterity that was passed by the
Greece parliament
Understanding the Greece story
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Hope you now understand the Greece story
Please give us your feedback [email protected]
mailto:[email protected]:[email protected]8/2/2019 Understanding Greece Story
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The views expressed in these lessons are for information purposes onlyand do not construe to be of any investment, legal or taxation
advice. The contents are topical in nature & held true at the time ofcreation of the lesson. They are not indicative of future market
trends, nor is Tata Asset Management Ltd. attempting to predict thesame. Reprinting any part of this presentation will be at your own
risk and Tata Asset Management Ltd. will not be liable for theconsequences of any such action.
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