How the Greeks got into this mess

While Greeks across the peninsula and its thousands of islands amassed Sunday for a critical vote on whether to attempt to restructure its debt or accept the austerity terms of the International Monetary Fund, there is much debate of what hangs in the balance.

Many analysts on Wall Street sees the vote as a referendum on the future of the euro as a pan European currency.

The measure being debated however, has more to do with the never-ending fiscal burden on the Greek people over the viability of its economy to pay the high price of being in the European Union.

Since the late 1990’s there has been much debate over if Greece should be accepted into the euro zone due to large budget deficits and public debt levels. Greece was not an original member of the euro zone due to debt levels much above 3 percent of GDP threshold, which was deemed acceptable by the EU in 1999 when the currency was introduced.

Foreign bankers including some of Wall Street’s biggest names led by Goldman Sachs descended on the Greeks in 2000 to help fix the books so it could be accepted into the euro zone. The government at the time was complicit with the rigging in order to get into the euro.

After this restructuring, Eurostat, the statistical office of the European Union, questioned the new debt ratio figures submitted by Greece for inclusion in the euro in 2001 and ultimately unearthed data that showed it did not get its debt under the accepted threshold.

“Greece cheated to get in, and it’s difficult to know how we should deal with cheaters.” former European Central Bank Chief Economist Otmar Issing said back in 2011.

So while a “No” vote is not a vote for exiting the euro, as Greek Prime Minister Alexis Tsipras has said, it could be seen as an admission that Greece is in over its head in debt as a result of its 2000 debt restructuring and that in the future it will probably  have to go back to the drachma.


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