Greece Debt crisis and and European sovereign debt crisis is making headlines for quite some time and now world markets are struggling to move up due to the latest developments in Greece and European union.
After 2007 financial crisis most of the European countries are not in a financially stable position due to sovereign debt crisis especially Greece, Ireland, Italy, Spain and Portugal.
If a country is not able to pay back it debts in full then it will land up in sovereign default and if the investors doubt about financial credibility of a country then they will demand high interest rates and thus the government end up paying huge amount of money as interest and it is called sovereign debt crisis.
In 2010 May IMF and Eurozone countries agreed for a 110 billion Euro loan for Greece. As per the agreement Greece had to adopt some major austerity measures to reduce the debt including major cut in public spending and raising taxes.
This created widespread protests across the country and 3 people killed in 5th may protests.
World stock markets plunged again last month with news about a possible Greek default. European union again agreed for a second bailout but as a surprise Greek Prime Minister George Papandreou called for a referendum on the bailout and its cabinet supported it which is expected to happen on Dec 4.
That means Greek government is going for a public voting to know whether to accept the bailout or not. If its people vote for no then Greece will be out of European Union.