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Practice English Speaking&Listening with: How the euro caused the Greek crisis

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To understand what's happening with Greece and the Eurozone, think about a dinner party.

If you're cooking just for yourself and your spouse, it's easy: you make something you

both like. But if you've got guests, things get harder. If you need to accommodate a vegetarian,

and someone who is gluten free, and someone with a soy allergy, your options get really

limited. And that's the problem with Europe's idea of having a whole bunch of countries

all use the same currency. So Greece's economy is in a disaster. A quarter of the population

is unemployed, and it has this very high debt burden. Normally, if you've got really high

unemployment, what happens is that a country makes its currency cheaper by printing extra

money. That makes its products cheaper on world markets, it makes it a more attractive

tourist destination, and it means that foreign investors can get great bargains. But if unemployment

is really low, a country likes to have an expensive currency. That increases people's

purchasing power and it keeps prices down. And in Europe, you have a bunch of economies

that are really different. A price of Euros that's appropriate for Greece, where they

have a 25% unemployment rate is way too low for Germany, where the unemployment rate is

below 5%. And Greece's problem is that it's small, poor, and geographically isolated from

the rest of the Eurozone. It's like the only vegetarian at a barbeque, except when it comes

to currencies, there's no side dishes. And so there's plenty of specific decisions we

can second-guess, plenty of things Greece did and various banks did that we can question,

but fundamentally having all these countries come to a dinner party with only one dish

on the menu was a mistake. The euro was a project that Europe set about on for really

political reasons. It was a symbol of their determination to have peace on the continent,

but they didn't really take the economics of it seriously. So Greece joins the euro

in 2001 and initially, it works out great for Greece because all of a sudden everyone

was like 'yeah, sure, let's lend them money.' So they borrowed lots and lots and lots of

euros, except that didn't change the fact that their economy is a lot weaker than some

of the other European countries. So to really work, you would need a much, much, much closer

union, where you had big financial transfers coming from the richer places to the poorer

places all the time. In the United States, the poor states like Kentucky, Mississippi,

Alabama, they're constantly getting money from the richer states like Massachusetts,

California, New York, through the welfare system, through Social Security, through Medicare,

through Medicaid. And you know, people may complain about this or that program, but we

don't dispute the idea that it's all one country so money is going to circulate around. Europeans,

you know, they just don't feel that way. Germans are willing to support poor German people,

but they don't want to support Greek people with their tax dollars. So they're kind of

like half-way integrated in a way that doesn't really work.

The Description of How the euro caused the Greek crisis