Greek Aftermath

Reinhart & Rogoff (2009) believe that "The aftermath of sever financial crisis share three characteristics".  The first of these so called characteristics being that asset market collapses are deep and prolonged, on equity markets declining on average 55% in three and a half years.The second, that on average output declines by 9% and employment decreases by 7%.  The third being that the real value of government debt increases dramatically by an average figure of 86%.  The graphs below show how the statistics for Greece compare to those given by Reinhart & Rogoff (2009).

The graph to the right show that from 2008 to 2011 unemployment in Greece increased from approximately 7% to 21%, hence a decrease in in employment of 14%.

The graph to the left shows the development of Greece's debt and Economic output over the same period.  The Debt Ratio, as a percentage of GDP, has increased by 50% in those three years, with debt massively increasing and economic output on the decline. 

Reinhart and Rogoff (2009) find that interestingly the main cause of the exploding levels of debt come not from the recapitalization and bailing out of banks (which is obviously large but has an upper limit); but rather from the reduction in taxes which results from the decline in economic output; which seems to coinside with what has happened in Greece.