Greece’s Economy Is Screwed And Nobody Can Agree On How To Save It

Greece is in a showdown this week with European leaders over the terms of its huge bailout, which expires on Feb. 28 and provides vital financial support. Update: Athens submitted a proposed workaround on Thursday morning.

update

Greece on Thursday morning submitted a proposed workaround to the eurozone, the bloc of 19 European countries that use the euro, which centered on extending its loans by six months. The eurozone is due to assess the proposal over the next two days but Germany, the bloc’s biggest power, has already rejected it.

Below is our look at how much economic trouble Greece is in, and what might happen next. BF_STATIC.timequeue.push(function () { document.getElementById(“update_article_update_time_5024940”).innerHTML = UI.dateFormat.get_formatted_date(‘2015-02-19 05:32:42 -0500’, ‘update’); });

Greece’s new prime minister, Alexis Tsipras, and his left-wing Syriza party swept to power last month with a dramatic vow to end spending cuts tied to the country’s recent bailouts. They’re now in a standoff with European leaders about what comes next.

Greece's new prime minister, Alexis Tsipras, and his left-wing Syriza party swept to power last month with a dramatic vow to end spending cuts tied to the country's recent bailouts. They're now in a standoff with European leaders about what comes next.

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Tsipras addresses parliament in Athens. Alkis Konstantinidis / Via Reuters

Greece has needed Europe-led bailouts worth 240 billion euros (or $272 billion) over the last five years to avoid bankruptcy, receiving cash in return for slashing public spending. The last bailout involved the European Commission, the European Central Bank, and the International Monetary Fund lending Greece those emergency funds.

However, now that Tsipras has taken office, Greece is demanding a new deal. The eurozone’s finance ministers will only allow an extension of the current one, including its austerity clauses. The two sides need to strike a deal before the current bailout expires on Feb. 28, but instead they’re locked in a stalemate.

Greece says the cuts have in no way stopped its economic tailspin. Just how bad is Greece’s current situation? Bad. Like, really, really bad.

Not an actual picture of Greece’s economic landscape, but close enough. Petros Giannakouris / Via AP

For starters, its economy shrunk by almost a third in 2008–2013, far more than other weak eurozone countries. Its recession has been nearly as bad as the Great Depression, The Economist says.

Also, around a quarter of Greeks are unemployed, the highest level in the eurozone. Among those aged 15–24, over half are jobless.

Will #Greece unemployment continue to fall under Tsipras? Data to November via @MacroPolis_gr

— Simon_Nixon (@Simon Nixon)

Greece’s government debt has ballooned to around 175% of the size of its economy, making it the third most indebted country in the world, according to 2013 data.

An anti-austerity protest in front of the parliament in Athens on Feb. 11. Yannis Behrakis / Reuters

To make it even worse, Greece has bailout bills to pay and they’ll be due soon. Here is a useful breakdown of just what it owes and when over the next year, from the Brussels-based economic think tank Bruegel.

Greek repayments to the IMF amount to 9.8bn for the whole year http://t.co/IOtQH3axEw #Greece

— Bruegel_org (@Bruegel)

Life in Greece is just all-round tough. There have been reported rises in homelessness, suicides, children living in poverty, and people who cannot afford necessary medical treatments since the bailouts began.

People queue to enter a gym hall for a Christmas meal for the homeless and the poor in Athens on Dec. 25, 2014. Alkis Konstantinidis / Reuters

If the current bailout expires without a deal, Greece would suddenly have to stay afloat without foreign support. It could run out of cash in April or May.

Germany, the euro bloc’s biggest economy, is dead set against carving out a new Greek bailout with fewer or no cuts involved. It is big on austerity and dislikes having to rescue countries that it thinks spend too wildly. In a sign of souring relations, a Greek left-wing newspaper recently published a cartoon depicting Germany’s finance minister in a Nazi uniform.

Athens is preparing to request an extension of certain loans on Thursday, Bloomberg reported, but this is not expected to be the same as requesting a bailout extension.

The worst-case scenario? The standoff forces Greece to leave the euro, something that neither side wants.

A “Grexit” would cause at least short-term turmoil in Greece, the BBC has reported. It could also cause shares to fall across the eurozone, this Financial Times column says. Other reports say the bloc has built up contingency funds in recent years that would protect it from much of the damage. No country has left the eurozone before so it would be uncharted territory — hence all the different predictions about what the fallout would look like.

Read more: http://www.buzzfeed.com/shyamanthaasokan/the-iron-bank-will-have-its-due-from-greece

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