Despite popular belief on college campuses in America, there’s more to Greece than just tourism and ruins. Greece did eventually grow and modernize with the rest of the world. In present-day, it is member of the European Union, an international alliance of 19 European nations linked politically and financially.
And that’s where the trouble starts.
Actually, that may have been a lie. The trouble actually starts across the Atlantic in 2008, when the crisis on Wall Street sent the United States into a recession. Due to the modern, interlocking world economy, Europe was also affected by the crisis, Greece suffering the most. Greece came clean about its understated deficit in 2009 and by 2010 was teetering on a bankruptcy that would crumble the already shaky foundation of the world financial system.
In order to avoid a complete financial meltdown, several high-powered banks issued the first of two financial bailouts for the nation, totaling more than 240 billion Euros, hoping that Greece would use the money to fix its struggling economy. Greece, however, simply attempted to use its bailout money in order to pay off its other debts (similar to a Ponzi scheme in the business world). That money bought them about five years and a 25 percent unemployment rate.
On Tuesday, Greece missed a payment of roughly 1.5 billion Euros to one of its creditors, the International Monetary Fund. Banks closed. Caps were set on the amount of money people could withdraw. International creditors then went to Greece with terms for a new international bailout deal in order to keep the nation afloat. The Greek government, however, did not like the terms of the bailout and wanted a firmer hand in negotiations. The country held a referendum on Sunday, June 26 so that the Greek citizens could vote on whether or not to accept the terms. The wallets of the world said yes. The Greek government said no.
The people voted no.
So ... now what? There are currently no more negotiations for a future bailout at this time. If the talks do not eventually resume, that could mean the financial failure of the nation and an exit from the eurozone and the European Union, or a "Grexit." Many cite the voted "no" as a foreshadowing or even verbal message of Greece's departure. The fate of the nation and the European Union as a whole is currently to be determined.
And why should Americans care about the bankruptcy of a nation half a world away? Greece's financial problems reared their ugly head following the Wall Street crash in 2008, meaning that what happens in one nation can clearly have an effect on the other. The possible departure could have serious economic and political implications for Europe and, by extension, for us. Even though most European nations put up protective economic barriers and sold all of their Greek bonds following the original trouble in 2010, a nation has never left the Eurozone before and thus the full effects of the departure are unknown. Politically, it could give other nations precedent to leave the Eurozone, which could lead to its eventual collapse. Financially, it could through the world into a new arena of uncertainty. It would create instability at the very least, meaning that the entire industrialized world would have to proceed with caution if not a level of inner dread and panic if things got more serious.
Okay. Don't panic. That was an exaggeration, and I'm not qualified to have a professional opinion. Don't think that the Eurozone is going to collapse because I said it might happen. The Eurozone could also become even stronger if Greece leaves because it loses its weakest link. Anything might happen. I just really happen to enjoy "Monster's Inc."
The point is, you should be on alert and should be tracking what's going on in the rest of the world. Even if you don't particularly care about what's happening overseas, it could have serious implications for America even if the United States isn't directly in the headline. The vote certainly had implications for America and the rest of the world, even though we don't quite know what those implications are yet. We'll proceed with caution, pay attention and keep you posted.