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Beware of Greeks Bearing Debt

Looks like another financial crisis has been averted for now, but I share SayUncle’s puzzlement about how Greeks Grok economic principles. Spend more money than you take in, eventually you run out of other people’s money. It’s still hard for me to understand why the European Project is worth British and German bankers having to continuously bail out the fiscal basket cases of Europe. At least the British were smart enough to stay out of the monetary union, but it’s hard to imagine the Germans are going to keep agreeing to bail out other members of the Eurozone.

11 Responses to “Beware of Greeks Bearing Debt”

  1. David says:

    Sooner or later, hard at work Hans and Heidi are going to realize that all their work and rising taxes are going to pay for lazy Gus to retire at 50 and lay around all day drinking ouzo. Then the riots in Berlin will start.

  2. Stretch says:

    Hans and Heidi may decide Greece should be re-occupied and Gus force to repay the loan. And this time Britain shouldn’t bother to save them.

    An English friend once said “The only thing the Balkans gave us was movies. One great, one fair.”

  3. roken says:

    They keep bailing out Greece because letting them default could potentially cause another massive financial crisis. European Banks (and american ones too) have a great deal of exposure to Greece so any problem there would have a ripple effect. In essence this is the European “Lehman Bros.”. Remember how well that worked out?

  4. Jeffrey H says:

    The same can be said for the US. Sooner or later China and Japan are going to stop lending us money if we don’t start living within our means.

  5. David says:

    Bankruptcy is great, it forces people who lack credit control to live on only what they take it. It’s the best lesson an overspender can get.

    Bailing them out only sends the message that it’s okay to continue reckless behavior and spending.

  6. roken says:

    David, bankruptcy can hurt many other people. Its not always worth it to “make a statement”. While i think they need to go through some debt restructuring letting them default would be disasterous. Yes, it would be great to thump our chests and say “they need to learn their lesson” but the world financial system would collapse- so is it really worth it? Wouldn’t it be better to stabilize, then restructure them? Essentially forcing them to default is a “cutting off your nose to spite your face” situation

    Jeffrey H, The U.S. is a different story- we print our own currency therefore its impossible for us to default unless we choose too. Also they are forced to lend to us else their economies would find themselves in the shittter

  7. roken says:

    David, bankruptcy can hurt many other people. Its not always worth it to “make a statement”. While i think they need to go through some debt restructuring letting them default would be disasterous. Yes, it would be great to thump our chests and say “they need to learn their lesson” but the world financial system would collapse- so is it really worth it? Wouldn’t it be better to stabilize, then restructure them? Essentially forcing them to default is a “cutting off your nose to spite your face” situation

    Jeffrey H, The U.S. is a different story- we print our own currency and denominate our debt in it, therefore its impossible for us to default unless we choose too. Also they are forced to lend to us else their economies would find themselves in the shittter

  8. David says:

    The world is not going to collapse over Greek defaults. Continuing to enable the Greeks to make poor fiscal decisions is not doing anyone any good. The real problem here is the the Eurozone is not doing what it should and kick them out. The whole Euro currency is puzzling to me, when you have countries like Greece, Spain, and Portugal spending away. The Brits were the smartest ones, by staying out of the Euro currency. Sooner or later Greece is going to fall, as it has before, it’s just a question of the few it would take with it today or the many it will take with it tomorrow. Better to stop throwing good money after bad.

  9. roken says:

    David, similar things were said in 2008 about troubled financial firms. Look where we are now. Its not necessarily that Greece was spending beyond their means s well, but that the floor beneath them caved- the recession caused mass unemployment which decreased tax revenue and forced the government to increase spending on benefits due to high unemployment- very similar to every developed country. The only difference is that Greece got hit exceptionally hard, and they do not have a central bank with control of its sovereign currency. If it did, there would be no Greece crisis- their central bank would just quantatively ease their debt and all the greeks would experience would be a few years of high inflation (if even that- the U.S. is not suffering from high inflation due to such policies- based on the Core CPI).

    But i do agree that Greece should not be in the euro.

  10. Alpheus says:

    I’m not all that confident that propping up our financial institutions has prevented a collapse of the financial markets. Indeed, with the United States going into spending free fall, all the bailout has done has been to postpone what is likely inevitable. And Europe, attempting to bail out Greece, is in the same type of boat.

    You can’t continue to bail out bad organizations, when your own ship is taking on water–at some point, you’re going to have to say “That’s it! We can’t help you anymore! WE HAVE NO MONEY.”

    And I’m bracing myself for when that happens, both in America and in Europe. When it happens, it’s not going to be pretty.

  11. mobo says:

    I thought I read somewhere that as a condition of entry into the union, member states must agree to a “stability and growth” pact, which limits them to an annual deficit of 3% of GDP.

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