I'm trying to understand how the Greek economy impacts the Euro...
European sovereign debt crisis - Wikipedia, the free encyclopedia:
May 2, 2010 austerity measures :
"Public sector limit of €1,000 introduced to bi-annual bonus, abolished entirely for those earning over €3,000 a month.
An 8% cut on public sector allowances and a 3% pay cut for DEKO (public sector utilities) employees.
Limit of €800 per month to 13th and 14th month pension installments; abolished for pensioners receiving over €2,500 a month.
Return of a special tax on high pensions.
Changes were planned to the laws governing lay-offs and overtime pay.
Extraordinary taxes imposed on company profits.
Increases in VAT to 23%, 11% and 5.5%.
10% rise in luxury taxes and taxes on alcohol, cigarettes, and fuel.
Equalization of men's and women's pension age limits.
General pension age has not changed, but a mechanism has been introduced to scale them to life expectancy changes.
A financial stability fund has been created.
Average retirement age for public sector workers has increased from 61 to 65.[61]
Public-owned companies to be reduced from 6,000 to 2,000.[61]"
Without a bailout agreement, there was a possibility that Greece would have been forced to default on some of its debt. The premiums on Greek debt had risen to a level that reflected a high chance of a default or restructuring. Analysts gave a 25% to 90% chance of a default or restructuring.[64][65] A default would most likely have taken the form of a restructuring where Greece would pay creditors only a portion of what they were owed, perhaps 50 or 25 percent.[66] This would effectively remove Greece from the euro, as it would no longer have collateral with the European Central Bank.[citation needed] It could also destabilise the Euro Interbank Offered Rate, which is backed by government securities.[67]
