General Discussion
In reply to the discussion: The Crisis In Europe Has Only Just Begun [View all]DetlefK
(16,423 posts)The EU had complicated negotiations what kind of country would be allowed to join the Euro. German Chancellor Kohl insisted on very strict baselines for economic stability, but they got weakened more and more. In the end he had the choice to accept a weaker Euro or no Euro at all.
There are 5 criteria: deficit, debt, inflation, interest-rates and a currency exchange-rate with little fluctuations.
Violate these criteria and you can't join the Euro.
Violate these criteria after joining the Euro and you must pay a fine.
https://en.wikipedia.org/wiki/Euro_convergence_criteria
The limit for deficit was and is 3%. At the time when Greece applied for the Euro, their deficit was more like 6%.
The limit for debt was and is 60% of yearly GDP. At the time when Greece applied for the Euro, their deficit was more like 105%.
Greece cooked its books to meet the criteria. (Some numbers were totally made up because the greek finance ministry itself didn't have numbers.)
Nobody at the EU believed them, but also nobody had the authority to double-check them and demand insight into files of the greek state. And thus Greece joined the Eurozone.
Once inside, there was the problem of keeping up the deception. And that's when Greece hired Goldman Sachs.
Was it Tsipras or Varoufakis? One of them said in an interview that it's too late for Greece to leave the Euro and that Greece never should have entered it in the first place.