Economic Strife

By: Danielle Apfel

While the focus has remained on Greece over the past few weeks, they are not the only ones facing major economic problems. Investors and economists believe that Greece’s “grexit” from the Eurozone could unleash a myriad of negative consequences on the global economy. In fact, after the Greeks voted “no” in regards to the most recently proposed bailout agreement, the global markets did take a dive. However, other nations seem to be contributing to the current economic downfall just as much as the Greeks.

 

In keeping with all things Greek, the emergency summit called for this past Tuesday ended swiftly, as the Greeks did not offer a substantive or progressive proposal to help eliminate their rising loan debt. However, with another request for international loans, the Greeks finally submitted a new plan for economic reforms this Thursday. This plan, a striking step for the Greeks, finally offered austerity measures in return for more loans.

 

Now, representatives of the 28 European Union’s member nations will meet Sunday for a final meeting to resolve the Greek dilemma. Should events turn against the Greeks, they could very well be forced out of the Eurozone.

 

While the Greeks face the consequences of their economic policies in Europe, similar problems are happening in the U.S.’s backyard. Puerto Rico continues its struggle with over $72 billion in public debt. Current Governor Alejandro Garcia Padilla is quoted saying that the island’s debt is “not payable” and has urged political leaders here in the U.S. to lend a hand.

 

Although the Puerto Rican debt would not harm a currency’s value like the Greek’s, the inability to pay would of course negatively impact the global markets. Because there is no individual banking system native to Puerto Rico, the government there cannot close banks to help reserve cash. As they struggle with their debt issue, they are fortunate to have more willing help, especially from the U.S. However, until the problem is resolved, Puerto Rico remains in the same sinking ship as Greece.

 

Now entering the widespread economic crisis is China. Despite the years of economic growth, China’s markets now face trouble. When the stocks fell drastically- 32% over the last month- the average Chinese citizen lost the ability to buy stocks on borrowed money, and also made them accountable for the money they invested and subsequently lost.

 

Borrowers have been coming out in droves to sell off their stocks to repay their debts, initiating a further drop in the markets. To account for the drop in the value of market stocks, the Chinese government began to provide money to investors to buy back said stocks. Although this should theoretically stop the drop in the value of the market, it inevitably elicited a more drastic image of the situation, causing more and more Chinese citizens to sell.

 

Although the economic turmoil is cause for concern enough as it is, the Chinese government faces the ever-growing threat of citizen-protesters.

Although Greece has been in the limelight for a much longer period of time, they are not the only ones facing a serious economic crisis. While Puerto Rico may not have as severe consequences as Greece in regards to the value of their currency, China could simultaneously be in the middle of an economic crisis and a social upheaval.

 

 

 

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