Greece's Debt Crisis - How Does This Happen?

[JRL]

What exactly has happened with Greece that has led their debt situation to what it is?

Is it not a diverse economy? Do they just love to spend money a bit too much?

 

[Scataphagos]

Quote from JRL:

"... Do they just love to spend money a bit too much?

Isn't that what gets nearly ALL governments in trouble eventually and brings them down?

 

[dandxg]

Its not diverse at all. Shipping and tourism is what I understand. Sense of urgency. Not when I was there. Unless they were driving. I would like to see their productivity stats compared to Germany or France.

 

[Misthos]

Diversity of economy has nothing to do with this crisis.

You know why Greece is having problems? Because being a member of the EU means that they cannot control the printing press and create money from nothing to continue the charade of government solvency.

What is happening in Greece is reality.

What is happening in the US, UK, Japan, is not reality. Their numbers (debt to gdp) are not much better or worse. But no country is immune from reality. When reality hits those countries - then you will see the damage caused by the printing press approach.

It will be worse.

 

[JRL]

Quote from Misthos:

Diversity of economy has nothing to do with this crisis.

You know why Greece is having problems? Because being a member of the EU means that they cannot control the printing press and create money from nothing to continue the charade of government solvency.

But what is it that's forcing economies to print money at all? Too much debt? Underfunded liabilities (Medicare, etc.)?

 

[Misthos]

Quote from JRL:

But what is it that's forcing economies to print money at all? Too much debt? Underfunded liabilities (Medicare, etc.)?

If they don't print, they have an immediate deflationary collapse. They prefer a hyperinflationary collapse 5 yrs or so from now than a deflationary collapse today.

If you were in charge, wouldn't you do the same thing?

 

[unretired]

I would like to see their stats as well.

I haven't a clue as to the level that shipping is one of their major industries or not ...
but shipping has been hit very hard lately and shows little signs of relief.

 

[JRL]

Quote from Misthos:

If they don't print, they have an immediate deflationary collapse. They prefer a hyperinflationary collapse 5 yrs or so from now than a deflationary collapse today.

If you were in charge, wouldn't you do the same thing?

But wouldn't the hyperinflationary collapse be more severe?

Essentially, they'd just be in the same spot as they were pre-printing, but now they'd be even deeper in debt.

I suppose, considering their self-interests, that they'd want to do whatever it takes to earn votes/confidence NOW, but wouldn't a deflationary collapse today, ultimately, have less of an adverse effect than a hyperinflationary one 5 years from now?

 

[Misthos]

Quote from JRL:

But wouldn't the hyperinflationary collapse be more severe?

Essentially, they'd just be in the same spot as they were pre-printing, but now they'd be even deeper in debt.

I suppose, considering their self-interests, that they'd want to do whatever it takes to earn votes/confidence NOW, but wouldn't a deflationary collapse today, ultimately, have less of an adverse effect than a hyperinflationary one 5 years from now?

We should have had a deflationary collapse (mini depression) in 1987.

It's too late. A deflationary depression now would be extremely severe and we will always have people second guessing not taking the inflationary solution approach. No politician wants that. Better to keep the game going as long as you can than to decide on a collpase today.

People are clueless. They hate the deficits the US Gov't is running. What they don't understand is that deficit spending is what's keeping the wheels from falling off the economy today.

My opinion is that we are going to keep this charade going as long as possible, hope others meltdown before we do, and then come out with a new monetary system - a clean sweep. This may result in war.

This is not tinfoil... monetary and fiscal policy did not end the last depression. A war did.

 

[vulture]

Quote from JRL:

But wouldn't the hyperinflationary collapse be more severe?

Essentially, they'd just be in the same spot as they were pre-printing, but now they'd be even deeper in debt.

I suppose, considering their self-interests, that they'd want to do whatever it takes to earn votes/confidence NOW, but wouldn't a deflationary collapse today, ultimately, have less of an adverse effect than a hyperinflationary one 5 years from now?

That pretty much summarizes the US situation as well. There is a short lived effect of issuing massive monetary stimulus, yet we find ourselves in a situation where asset prices deflate back to previous levels, yet individuals, corporations, governments are left with a massive bill for the exercise in futility.

At this point, you notice all planning is to get us thru this month, this quarter, maybe this year. On the state level, federal level, etc, etc. There is no long term planning anymore, it's just a "stop the bleeding" approach until the next crisis.