A slight correction. Greece has already received two bailouts worth billions in the last five years . . . with the condition that they will implement necessary structural reforms in their economy. For example, pensions in Greece are way to high for what the people paid in. And their are way too many civil servants.
Greece essentially "cooked the books" and hid state debt. This only works for a while. When this was discovered five years ago, Greece was shutout from the international capital markets: No one would lend to them anymore. However, a lot of private banks had too much exposure to Greece, which forced the Troika, the EU, the European Central Bank (ECB) and the International Monetary Fund, to arrange a bailout, to avoid financial contagion. The private banks received a "haircut", which means that they would only receive a smaller percentage of the money owed to them. Most of the debt now rests on EU taxpayers.
Greece dragged their feet on implementing reforms. So a second bailout was necessary. Things were getting better, as they now had GDP growth. Well, then the Greeks went off at the beginning of this year, and elected a new coalition of Radical Left Marxists, and Right Wingers. And since then, things have taken a major turn for the worse. The new government promised to:
Raise pensions
Hire more civil servants (to reduce unemployment)
Erase bailout debts
Sounds like a nice plan . . . but where do you get the money to finance this? Well, the EU should just give more Euros to Greece! Which is politically untenable for the rest of Europe. The only way this could work, is if Greece had their own currency to devalue. So, in the long run, Greece needs to leave the Euro. Except, a majority of Greeks want to stay in the Euro. Thus, the current Greek government wants to get kicked out, so they can blame the EU for it. But the EU does not want to take the blame, so they won't kick out Greece. What we have now, is a slow speed train wreck.
