Is Greece a Failing Developed State? Causes and Socio- economic Consequences of the Financial Crisis!

Harris Mylonas
Political Science Department, George Washington University.

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The Context
Is the Greek crisis an isolated case or the first of a series of future failing developed states? The Greek financial crisis is not on the front page of the Financial Times anymore, but it is far from over. The financial crisis did not manifest itself in Greece alone. Ireland has also sought an equally large EU-IMF rescue plan. Portugal and Spain have been under the microscope of the media and credit rating institutions. Such other instances in the Eurozone’s periphery have repercussions for the currency as a whole as well as for the EU (Straubhaar, 2010). Greece, Ireland, Portugal and Spain are members of the Eurozone area, which means that they share the same
currency with economic giants such as Germany and France.
Greece’s debt is primarily owned by French, German and, to a lesser extent, British banks. If Greece defaults, this would severely undermine the confidence in other “risky” countries such as Spain, Portugal and Ireland. Northern European banks have a total exposure of two trillion euros to these countries.1 Thus, a Greek default could bring down many of these banks – in addition to most of the Greek ones – and ultimately could unravelthe whole financial system of the European Union…

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