It is all Greek, Then Now and How?

To understand the Greek Debt Crisis it is important to go down the timeline and
examine the sequence of events in the history of Greece which led to it being in
a big hole which the country currently finds itself in.
Formerly invited in June 2000, Greece became the twelfth country to adopt
the single euro currency and became a part of the Euro Zone in 2001. The
Eurozone currently has 19 countries. To qualify, Greece had to demonstrate
signs of a healthy economy, including meeting targets for price stability and
public finances, which later the Greece government confessed to reporting
inflated figures to achieve Eurozone Membership.
Euro Currency Adoption: The adoption of a common Euro currency had a
negative impact which eventually led to the weakening of the Greek economy.
Introduction of the euro as a common currency, reduced trade costs among the
Eurozone countries, increasing overall trade volume. However, labour costs
increased more in peripheral countries such as Greece relative to core countries
such as Germany, making Greek exports less competitive. As a result, Greece
saw its trade deficit rise significantly.
Overspending: Overspending by the Greece government is one of the major
reasons why Greece finds itself in this deep debt crisis. The Greek government
has always spent lavishly on the people of the country be it Pension and social
reforms like :

Support to the blind population,

High Pension payments,
High Wage rates
High Fiscal spending

Despite being one of the fastest growing economies, the country continued to
record high budget deficits each year. In 197480 the general government had
an era with moderate and acceptable budget deficits (below 3% of GDP). This
was followed by a long period with very high and unsustainable budget deficits in
19812013 (above 3% of GDP)
All these factors have contributed to the current debt crisis.

Tax Evasions and Corruption: Another persistent problem Greece has suffered in
recent decades is the government's tax income. Each year it has been below the
expected level. In 2010, the estimated tax evasion costs for the Greek government
amounted to well over$20 billion.The latest figures from 2013, also show that the
State only collected less than half of the revenues due 2012, with the remaining tax
owings being accepted to be paid by a delayed payment schedule.
As of 2010, tax evasion was widespread, and according to Transparency
International's Corruption Perception Index, Greece, with a score of 36/100, ranked as
the most corrupt country in the EU.

After years of overspending and mismanagement, Greeces public debt rose to 350
billion euros. The IMF , EU Central Bank and other member EU countries lend 110 Billion
Euros to help the government pay its creditors in return for painful austerity measures
like spending cuts, wage cuts, tax rises and pension reforms.

Since 2010 the Greek GDP has fallen by 25%, salaries by even more and 28% of
the workers are jobless.
The anti-austerity party Syriza wins the general election in Greece in Jan 2015
with a pledge to renegotiate the aid terms. After the election, the Eurogroup
granted a further four-month technical extension of its bailout programme to
Greece; accepting the payment terms attached to its last tranche to be
renegotiated with the new Greek government before the end of April, so that
the review and last financial transfer could be completed before the end of
June 2015.The new renegotiation deal was still pending by the end of May.
Faced by the threat of sovereign default, some final attempts for reaching a
renegotiated bailout agreement were made by the Greek government in the
first half and second half of June 2015.Default would inevitably entail
enforcement of recessionary capital controls to avoid a collapse of the banking
sector and potentially could lead to exit from the Eurozone, due to growing
liquidity constraints making continued payment of public pension and salaries
impossible in euro.
The Greek government in desperate measures closed all the Banks in the
country and set an upper withdrawal limit of 60 Euro per Card per Bank for the
locals. The country has given a clear mandate with 61% people voting NO to the
Bailout Referendum with stricter bailout conditions by the IMF, EC and ECB laid
in front of the nation for polling by Prime Minister Tsipras . With Greece
defaulting on the June 30, 2015 deadline to pay 1.6 Billion Euros to the IMF and
the people rejecting the Bailout referendum , there are chances of Greece
exiting the Eurozone as called as Grexit. This would have cascading effects on
the Eurozone especially the remaining PIGS nations (Portugal, Italy and Spain).
Thus, the Eurozone as an entity indeed faces a hard time in the future and the
Greece crisis would decide its existence and importance in the world economy in
the future.