Remember the Economic Systems ! Capitalism: Is about people owning business with little government involvement. It’s about making profit Communism: Government controls businesses and there is no private ownership Socialism: Some Government involvement with the businesses and taxes are high
But Economic systems are much, much more complicated…..
The Euro Zone Financial Crisis!!!! By: VJ Mohit Grade:6 Home base: Mr. Freeman
FACTS ABOUT GREECE Country: Greece Capital: Athens Form of Government: Parliamentary Republic Population: 10, 722, 816 Currency : Euro
FACTS ABOUT GREECE…cont. Greece abolished its monarchy in 1975 Under the Parliamentary republic there is a Prime Minister and a President The Prime Minister has the most power Greece became part of the European Union in 1981
WHAT IS EUROPEAN UNION The European Union is a political and economic group of European 27 countries EU has free movement of people, goods, services and money. So what happens in one country’s economic system affects another country.
HOW DOES MONEY FLOW? Countries and private businesses need money Government gets some from taxes and borrows some from other countries and banks Borrowed part is called principal and the extra cost for borrowing is called the interest. Many countries in the EU have borrowed a lot and now cannot pay back In Greece it is assumed that almost half of the money borrowed (called debt) which includes the principal and the interest can not be repaid back
WHY DID THIS HAPPEN IN GREECE? Greece has been living beyond its means in recent years Greek government borrowed a lot and then spent a lot after it adopted the euro € Public sector (another name for government) salaries doubled in the past decade. Government spent a lot but could not collect enough tax because of widespread tax evasion
IMPORTANT DETAILS !
More than 5 million Greeks did not pay income taxes for 2008 Many Greeks are not reporting their income to avoid paying taxes Taxes that people pay is money that goes towards the Government. In the case of Greece the money being spent was more than the Government was earning
HOW DOES IT AFFECT OTHER COUNTRIES? Greece owes money to many other European countries and banks If it can not pay it back, these countries and banks loose money Those countries and banks then have less money for their own government and private businesses Greece is not the only country affected in this way, other countries are Italy, Portugal, Spain
WHAT DOES IT MEAN FOR YOU AND ME? As you know many goods are now days made in Asia because of low costs and skilled people But these goods and services are also bought by government and private businesses in the EU If governments or private businesses do not have money to buy these goods and services from Asian producers it means Asian businesses suffer and people here loose jobs
SO THAT MAKES ME ASK SOME QUESTIONS? Why were governments allowed to spend so much? Who controls the governments Why didn’t the banks tell the governments to stop borrowing? ….like I said economic systems are complicated…..but very interesting….!
Chinese Govt. China Chinese shoe making factory T Chinese Workers $ NIKE manager’s salaries INDIA For raw material like leather Indian Farmer for the cow skin Govt. T $ The Story of VJ’s NIKE Shoes Nike US Govt. Builds roads Philippines Govt. $$ Philippines business’ loans T Pays for the soldiers in Afghanistan Philippines Shop Owner $ To Greece as a Loan $$ $
RESOURCES CNN Website: A Greek tragedy: How the debt crisis spread like a virus in 'Contagion' http://news.blogs.cnn.com/2011/09/19/a-greek-tragedy-how-the-debt-crisis-spread-like-a-virus-in-contagion/?iref=allsearch BBC Website: Eurozone crisis: What turmoil means for you http://www.bbc.co.uk/news/business-14418290