Greece Bailout and economic crisis explained

Greece receives €130B from other countries to pull out of financial trouble. What happened?

This is a complex topic- but read the fun explanation below to understand what happened.

Imagine you get $30 as pocket money allowance per month from your Dad. This $30 is your fixed cost- you spend this on school canteen for food every month. You end up spending all your $30 in 20 days- with 10 days still remaining. But then you liked a special candy which costs $5. Since you did not have any more pocket money left, you ask your dad for some advance money and your dad agrees. Then, after 5 days, you go to the beach with friends and rent roller skates to have some roller blading fun with friends. This cost $10. Now, you obviously did not have the money on you- but you asked your friends for some money. They lent some money to you on the promise that you are going to return when you get your pocket money allowance next. So think about it- you actually had only $30 that you could spend- but you ended up spending $30+$5+$10= $45

Next month you received $30 as your monthly allowance- but you have to pay out $45 including school canteen food worth $30 a month. What will happen? You would not be able to return that money- and you could be in trouble. Unless some of your friends or your parents agree to help you with paying back the money you owe to others. This means that you are in debt (you owe people money) and you need a bailout (someone helps you with money to pay off your debts) The good part- your dad decided to bail you out. But he wants the best for you- and to instil some discipline, he puts in some conditions. For the next 3 months- no candies and no video games. You have to agree- and hopefully be more prudent about money the next time. The situation is somewhat similar with Greece. Greece took too much money and went into debt. It needed a bailout by others to get out of trouble. Some countries have agreed to help Greece by lending the country more than 130-billion euros. Euros (symbol: €) are the units of money used in 17 countries in Europe including Greece, France and Germany. But just like your Dad put in some conditions for your bailout, the countries that have agreed to bail Greece out of its money problems are demanding something in return. They are insisting that the government of Greece spend less for certain things. For example, Greece must pay its workers less. It must also reduce the amount of money paid to workers once they retire. These cuts to spending that will affect the people of Greece are called “austerity measures.” If the plan goes ahead, the austerity measures will also reduce, or cut, the amount of money spent on health care, education, people's retirement payouts and some other benefits to Greek people. A team of 'monitors' will also watch over Greece's spending over the next few years and to ensure that right measures are put in place.

It is like a bitter pill that Greece has to swallow.

And many people are not happy about it. They think Greece is giving away too much control to outside countries- and there are protests- some peaceful and others violent. But with change, some of this unrest is to be expected. Greece is an important part of the European finance system- and rescuing Greece from breaking down was important for the world. The Whiz Times will keep a keen eye on the European crisis and bring back from time to time.

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