Let’s pretend for a moment that Greece is a human being. I’ll call him George.
George (=Greece) is a hairdresser and makes $40,000 per year. George has limited assets. He has zero savings, no precious metals, and is way underwater on his mortgage. His credit card debt is over $100,000, and his bare minimum living expenses are $45,000 annually, over 10% more than he makes. George’s credit is pitiful, and he cannot obtain any more new loans.
George’s neighbor Hans (=Germany and France) has a big family. All the kids work hard and contribute to the family savings. Hans sees George’s plight and decides the neighborhood has to stick together; he starts loaning George some money out of his family’s savings, and eventually begins to take on more and more of George’s personal debts.
Many of the other neighbors– Luciano (=Italy), Seamus (=Portugal), and Juan (=Spain) – are in the same boat as George: drowning in debt with massive personal expenses and no hope to pay them back.
Everyone is looking to Hans for help. He’s the responsible one in the neighborhood. Now, Hans doesn’t want them all to go bust because he knows it would be bad for the neighborhood property values… but Hans’s children (=German people) are balking at the prospect of working hard on their newspaper routes just so that George can keep his plasma screen TV.
Very soon, George is going to run out of options and will have to have a difficult conversation with his credit card companies. In the real world, there is no other choice.
In the pretend world of politics, however, European leaders have been able to convince everyone that it’s all under control. Never mind that the whole situation has completely fractured capital markets; traditional valuation metrics have taken a back seat to rumors of secret meetings and loud talk of bailout plans.
Think about it: Dexia (=name of European bank) passed summer bank stress tests with flying colors. A couple of months later it’s going bust. How can markets function without confidence in balance sheet accuracy? Or whether a government will even be around tomorrow? This is kind of a problem when sovereign debt is the cornerstone of the financial system…
And yet, stock markets worldwide surged today on the news of a European ‘pledge’ to help banks.
Do yourself a favor and stop watching their lips move. These ‘plans’ are nothing more than lies and misdirection. Just like our friend George, a Greek default has to happen. Politicians can pretend whatever they want, but in the real world where we live, financial deadbeats have no other options.
The world is irrevocably intermingled together in this modern time.
One crisis beyond the Atlantic Ocean will undoubtedly create another crisis here.
USA itself has the very similar problem too.
The magnitude of the problem is not well visible here
because we can print endless amount of dollars at any time.
Soon or later, something has to bust. It cannot go on like this forever.
It's not just "a nation to a nation" business.
It will affect our personal life as well.
How?
Some of us may never be able to retire, and some retired persons may have to go back to work,
not because it's our faults but because of their faults.
If you aren't interested in a stuff like this, please don't bother to read.
Actually, there is nothing much you can personally do except just helplessly becoming a victim.
However, if you are interested in, and if you haven't studied about this, please read.
Very soon, the disaster will be knocking on our door.
It doesn't look like it is "none of our business".