greek debt crisis.. basically how it happened, here comes the story behind by mr thinker.....

Before starting the Greek story, lets us unwind the series of events in Europe :-
1. adoption of euro as a currency by greece. The European union is controlled by european cental bank.The countries enjoy debt at lower interest rate than what is prevailing in the market.
2. reckless spending by greece government , huge amount of loans and government spending on the development causes havoc in the market. the debt to GDP ratio ,since 1993 is above 100 %.
3. Involvement of goldman sanchs in greece financial market. Goldman sachs introduced complex swapping of different derivatives in various markets.
4.lack of faith in investors who want to invest in the greece market.

Chain of events............

Greece Debt Crisis started majorly after October 2009 when the new socialist government, led by Prime Minister George Papandreou, revised the estimate of the government budget deficit for 2009, nearly doubling the existing estimate of 6.7% of GDP to 12.7% of GDP. This seriously questioned the ability of Greece to repay its debt. the status of "JUNK" by three rating agencies(moody's,S&P,Fitch) also added fuel to fire.

Rescue plan:-

Since after the crisis, papandreou govt introduced many norms and reforms in the government arena. but,these steps does not bring confidence in the investors.
The European union came out with the bail out plan of more than 100 billion euros for the Greece. They also vowed to take tough financial regulations against Greece and piigs countries.
America is also taking keen interest in the Greek crisis as European union is its largest trading partner. imbalance in euro currency may lead to trade deficit to USA.