Greek Debt 101

I don’t usually comment on national and international news but this week I ran into an explanation of the whole Greek debt mess that helped me understand what’s going on.

In case you haven’t been following the news I’ll add some background. The world’s financial markets have been in an uproar over the last month because of fears that the Greek government will not be able to pay back money they owe to bankers and investors. The European Union has now pledged $140 billion to help them out.

The bailout has the Greek citizens up in arms because it will mean, tax increases, cuts in public spending (pensions, salaries) and a general belt-cinching they feel is unfair.

That’s the setup as they say, in the TV biz. But the reasons turn out to be pretty simple to understand.

The owner of a local business, who I know pretty well, is a Greek-American but he still has family back in the old country and visits often. So as I started to walk out of his shop with my purchase I asked, “What’s going on back home?”

“It’s simple” he says. “You see that piece of paper?” he asks, pointing to my receipt. “In all the years I’ve been going back, and all the things I’ve bought, I never got a piece of paper. They don’t write anything down, so the government has no idea who paid for what, or how much tax they should be getting. Now, they’re paying the price and they don’t like it.”

Sometimes, even the most complex international problems have a simple explanation. I’m sure the citizens of Greece have other opinions but this one makes sense to me.

Share on Facebook