Systemic Risk of Greece [Governments are the Primary Creators of Systemic Risk]

31 05 2011

Article can be found here

Discussion Questions:

1. Do you believe the other European countries should of lent money to Greece? Why? If not, what would you of done differently?

2. Who do you think is responsible for this potential financial crisis: the Greek Government, ECB, or the government representatives that put government loans into a special category that has a 0% risk requirement?

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One response

2 06 2011
lindashidilei

1. I think other European countries should lend money to Greece because they are all part of the European Union the crisis in Greece can somehow affect all the members of the European Union because they use the same currency. When a financial crisis happens, government is short on cash, a simple to help the country going through the crisis is by printing more cash in order to pay the debt off but for Greece, it’s all different story, they country can’t just print how much they want due to the membership of European Union. If they want to print out more cash but other countries don’t which can lead to a super long debate. Just lending them money can at least get them out of the debt and help the country, Greece to get back on the track.
2. They all are responsible for this financial crisis. Government should be the one who is supposed to protect the country in term of economy. ECB is consist of genius economist who should foresee the crisis and government representatives should have financial knowledges that help them to make investments. Three parties neglect the long-term effect but all focus on earning short-term money. They aren’t the one who suffer from the crisis. They are not on people’s shoes. Government, ECB and government representatives all have power to make the country better and strive to prosperity.

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