Greeks are voting Sunday on a landmark referendum: “Yes” or “No” to another bailout and more austerity? In Greek, that’s “Nai” or “Oxi?”
Polls show a contest too close to call. But this much is known: The result could cost Prime Minister Alexis Tsipras his job and force an abrupt change in government. And no matter how it goes down, it won’t solve the urgent crisis facing Greece.
Years of recession and austerity, compounded by failed political brinksmanship, have left Greece dead broke.
Without another rescue, economic calamity is likely: Banks will run out of money, seniors may not get their pensions, and unemployment — already an unimaginably high 25% — will worsen. Here’s how Greece got to this point.
What’s at the root of Greece’s problem?
Debt. Greece has way too much of it. Greece is not a big country. It has about 11 million people and an economy the size of Oregon’s. Tourism represents around 16% of Greece’s economic output.
Greece has so much debt that regular investors stopped buying its bonds — ie. lending it money.
All healthy countries — and even some unhealthy ones — borrow money by selling bonds to investors big and small. The point is to use the money to make the country stronger by doing things like building better transportation and infrastructure and making education better. The U.S. has a lot of debt, but it has a giant economy and can afford to pay it back.
But countries get into trouble when they borrow beyond their means. That’s what happened to Greece. Greeks have been voting today on whether or not to accept the proposals put to the country by its creditors, the ECB, EU and IMF.
The leftist Syriza government rejected these proposals and is seeking a ‘no’ vote. Proponents of a ‘yes’ vote say this will keep Greece in the eurozone.
