Understanding Greece Story

8/2/2019 Understanding Greece Story

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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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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



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While Greece had been spending

recklessly his earnings did not

kept pace with the same



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Hence he was on a perpetual

debt. To pay this debt he hadbeen taking additional debt from

his friends



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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.



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This poor track record of Greece

worried his brothers because theyshared the common family pool

account with him



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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.



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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



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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



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The frugal lifestyle being imposed

are the economic reforms forausterity that was passed by the

Greece parliament



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Hope you now understand the 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

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Understanding Greece Story

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