There’s no denying it, Greece has found itself in one of the worst economic disasters in decades. The Greek epidemic indefinitely left banks closed on June 29th, 2015, and are now under capital controls, leaving streets empty, businesses abandoned, and halted monetary flow. The outcome has resulted in limited daily cash withdrawals, forcing many small business owners to shut down. With each passing day, the economic crisis further deepens; resulting in numerous constraints and financial hardships on business owners who are dependent on consumer consumption--such as restaurants, shops, hotels, etc.
The European Commision is currently working on bailing out Greece for the third time by using a total of €86bn from an EU bail-out fund, possibly removing the expectation of the “Grexit.” The term “Grexit,” a combination of ‘Greek’ and ‘exit,’ refers to the possibility of Greece leaving the eurozone. If passed, the bailout will include changes to the Greek banking system, a repayment of debts and interest, and a complete revamp of the judiciary system, which in turn could raise taxes and increase the retirement age. A majority of citizens can agree on one thing: Greece needs to completely remove itself from the euro, and is in desperate need of a serious currency devaluation. Many say Greece will become a third world country if it does not do so.
There are a few contributing factors that led to Greece’s downfall--corruption, injustice, and lawlessness just to name a few. On June 30th, 2015 the International Monetary Fund (IMF) put Greece on liability after the country was unable to pay it’s mandatory 1.6 billion euros, becoming the first developed country to default on international obligations.The Greek government held a referendum on July 5th asking Greek citizens to vote on the bailout deal offered to Greece by its international creditors.
“Greek voters overwhelmingly rejected austerity proposals from the country’s creditors - the ECB, EU and IMF - in a snap referendum called by the leftist Syriza government...Voters were asked: 'whether to accept the outline of the agreement submitted by the European Union, the European Central Bank and the International Monetary Fund at the Eurogroup on 25/06/15.”
61.31% of citizens voted no, while 38.69% of citizens voted yes out 100% of total votes accepted.
Greece’s debt of 339.364 billion euros, or $374.14 billion, continues to rise at the rate of 71,470 euros, or $79,000 a second. Taxing efforts are through the roof, forcing many citizens to pay double income and property taxes, and obligated restaurants to pay a shocking ‘Value Added Tax’ of 23 percent.
The Greek Reporter states:
“Less than half of Greeks work, nearly 50 percent of those under 25 are unemployed, 25 percent of the estimated Gross Domestic Product is in the undeclared underground black economy, and the government spends 42 percent of its limited funds on social benefits. Too many Greeks spend 40 hours at work but not 40 hours doing work.”
Prokopis Pavlopoulos, President of Greece has promised to relieve Greece of its deep rooted corruption but has not yet delivered on his promise. The corruption Greece faces is heavily rooted into the country, making it difficult to determine how bad of a hit Greece will take before it begins to show signs of improvement. We thought the U.S. economic recession of 2008 was a hard hit, but that’s nothing compared to what Greece will face if things don’t turn around for the better.
In 2008, the U.S. experienced a similar economic downturn, where the stock market plummeted by a near 40%, resulting in a loss of 4.2 million jobs, an alarming rate of job-loss not seen since the Great Depression. The Wall Street meltdown, along with the job crisis, also contributed to the bursting housing bubble which triggered the economic collapse.
According to the U.S. Department of Labor and Bureau of Statistics, the unemployment rate in October 2009 was a record high of 10.80%, while Greece was facing a record low of 7.29% in May of 2008. According to The Trading Economics, in April 2015, the unemployment rate in Greece was a record high of 25.6%, while the U.S. unemployment rate on July 1st 2015 was 5.30%. The comparison of the unemployment rates between these two countries shows the highest and lowest points of unemployment during each economic recession.
So what should Greece do? The sharing economy has a few pointers:
In the U.S. alone, the sharing economy has added a solid 295,000 jobs over the last month, rising above the monthly gain of 200,000 jobs according to the federal government. According to Forbes, in 2013, it was estimated that revenues passing through the sharing economy into people’s wallets exceeded $3.5 billion, up 25% from the previous year. On demand companies such Airbnb exceed 10 million guest-stays since its launch and now has more than half a million properties listed. Meanwhile Uber is doubling revenue every six months.
Today, nearly 3.3 million Americans are earning paychecks than twelve months ago. But higher-paying fields also added jobs including professional and business services, which included accountants, engineers and lawyers, adding 51,000 jobs, construction added 29,000, and financial services added 10,000, while hotels and restaurants added 60,000 jobs and retailers added 32,000 jobs.
We’ve seen the sharing economy create countless jobs over the years, increasing income flow, and improving the overall consumption rate. People now have the option to work full time, part-time, and on their own schedule. Those who are retired, or are not fit for the obligatory 9-5 now have the opportunity to work through these on demand platforms. The option to make extra income is out there, and those who are using Uber, Airbnb, or other on demand platforms are only contributing to the overall consumer consumption, leading to an efficient and improved economic system. The one factor which inevitably halts the circular flow of a stable economy, is the fear of an economic recession. The minute consumers are fearful of an economic crisis, they stop spending extra money. This hold back of healthy, and necessary consumption leads to a severe economic standstill, which is what Greece currently is experiencing.
The extent of the deepening corruption has left Greece and Prokopis Pavlopoulos, in a one way, downward spiral. The “he said, she said” tactic the Greek government is practicing, of putting the blame on one another, is only contributing to the worsening development. We cannot determine which direction the EU will take in regards to the bailout. What we are sure of, is that once a decision has been reached, Greece should consider integrating the sharing economy into its society. Small business owners will have the option to partner with other businesses, and the opportunity for freelance work that is available. Those looking to earn extra income on their own terms have the option of doing so. Thus increasing consumption, and improving the overall economy of this debt-stricken countryNear Me, a customizable marketplace platform for entrepreneurs and brands fuels the sharing economy by providing the means for these on demand platforms to exist. Near me could power your next innovative idea.