Over the last few months Greece has run into some real troubles financially which could have a serious impact on the global economy. The Problems in Greece are complicated but are largely the result of the use of a common currency throughout the European Union. People are very concerned about the situation in Greece as they fear that it will cause a serious financial crisis that spreads through Europe and possibly around the world.

The main cause of the financial problems in Greece right now is that the government is running up too much debt and will not be able to pay it. The result is that most analysts believe that it is just a matter of time before the country defaults on its debts. If that happens it is going to cause a crisis for Greece and for the European Union as a whole. The problem for Greece is that they will find it very difficult to borrow money in the future, the problem for the rest of Europe is that it is largely them that Greece owes money to.

A big part of the reason that Greece has managed to get into trouble financially is that the decision to join the European Union meant that they no longer had the power to set their own monetary policy. They were now required to follow the same policy as everybody else using the Euro. This is largely set by the needs of the large countries like Germany and France. The problem is that the needs of Greece were different from those of the larger countries. Interest rates were kept very low at a time when Greece really needed them to go up.

Over the last couple of years interest rates in the European Union have stayed low in order to help stimulate the economy in Germany and France. This however created a situation in Greece where it was so cheap to borrow money both consumers and the government borrowed far more than they should have. Now that interest rates have started to rise they are now in a position of having more debt than they can afford. As a member of the EU the government is required to keep its budget deficit below a certain level. As a result of the debt payments they have to make they are currently at twice the level they are supposed to be.

The problems in Greece have been made worse by the fact that the value of the Euro has remained strong, far too strong for the Greek economy. This has been devastating for the tourism industry which is the largest economic sector in the country as it is now too expensive for most tourists to visit Greece. The value of the Euro has also raised the cost of goods that Greece exports which has also really hurt the economy.