Why Is Euro Going Down?
The economy of Greece is currently facing trouble since some investors are starting to pull their investments out of the Greek markets. Officials from the European Union have started taking necessary steps and desperately talking to the investors, hoping that it can give Greece a break on its fiscal demise. Investors who are pulling their investments from Greece are continuously betting against Greece which is causing the country more trouble.
Superficially, the primary cause of the sudden flight of investor is the fact that they think Greece is broke. It is not actually the fault of investors for wanting their money out of the debt ridden government since they feel like they cannot trust the country financially. In the end, it will still be the government of Greece who were irresponsible with the fiscal policy which results to current financial troubles. The government has continuously spent more than they can make until their debt has reached 94% of the domestic gross products.
It can somehow be compared to what has happened to U.S. when they reached 87% debt of their gross domestic products. If this trend continues, then the ratio of debt-to-GDP will then rise to 95% by the end of the current year and may reach 105% by the following year. Considering the size of the economies of both U.S. and Greece, it may be hard for both countries to come up with a good solution to stabilize their financial crisis and this could lead to more serious matters. But if investors may start Greece when it comes to financial issues, it might be able to help them get their economy back to the top. And with the help of their neighboring countries, this may not be a really hard task to go through with and this may be able to help their economy sooner or later.