Stock Market Crash

Stock Market Crash

Social conflict in Greece caused a stock market crash, making the Dow Jones Average by 1000 points. There are various factors that led to economic crisis in Greece. The Government has paid out high salaries with massive holiday bonuses. This substantial money made many Greeks to get early retirement. Most of them did not pay taxes properly. It became very difficult for the country to face the economic problems. Greek President took some efforts to tackle the situations. He pushed strict spending cuts and increased the age of retirement to 65. However, these efforts are not enough to rescue Greece from crisis.

Greece asked the help of her European neighbors. The experts advised the other European nations to provide a bailout. The European Union gave 110 billion Euro as financial aid package to Greece. However, this steep price tag makes the European Central Bank to slash interest rates and to print more currencies to cover the debt of Greece. However, this can trigger inflation. The Euro comes under pressure, leading to stock market crash.

Greece bailout has resulted in riot, as many people in Greece are in favor of evading their debt. They do not like the austerity measures taken by the government. The Unions are reluctant to implement any reduction in wages and benefits. The riots in Greece would result in the failure of the financial aid package. This in turn would lead to numerous problems in world stock markets. Greece is part of the euro currency union, so the member countries cannot leave Greece default on its debts. Spain, Portugal and Italy are the other countries, where stock market crash would arise shortly, because of the financial contagion.

Some of the investors are eager to invest in the Greek bond market, because the stock market crash causes stocks or bonds to tumble. However, the experts recommend that it is not advisable in such a volatile market for getting some short-term gains. They advice the investors to buy gold, as this precious metal is the best form of money that remains valuable forever. It offers benefits in the long run.

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