Connect With Us


Why Greece?


For the most part, I try to avoid economics issues. I understand two things about national economics: trickle-down leads to recessions and depressions, and Keynes fixes them. That pretty much covers it as far as I’m concerned. Republicans make the messes and Democrats clean them up and the cycle goes on and on.

So, trying to understand the dual problem of the collapse of Greece and the constant deafening drumbeat from the Republicans about how Obama is turning us into Greece was something I unfortunately had to try to figure out eventually. This conundrum ranks among the incomprehensible.

National debts are not figured in dollars or yens or deutschmarks. They are measured as a percentage of a nation’s gross domestic product. A nation’s money debt can remain the same, but if it’s GDP goes up, it’s national debt ratio goes down. If it’s GDP goes down, the way it does in a recession or depression, the national debt ratio goes up. All numbers used in this essay are external debt, not money a nation owes itself, like what we owe our Social Security fund.

America’s debt to GDP ratio is 99%. Not good, but not as bad as 1948 when it was 125%. We grew and taxed our way out of that one. In fact, we are tied with Bulgaria as the 33rd highest national debt ratio. There are only three countries in the world with no national debt – Macao, Leichtenstein and Taiwan. For some reason, there are eight countries listed as “n/a” for national debt ratios. Not exactly on the brink of bankruptcy, are we? But to hear the Republicans tell it, well, we are headed for a Greek meltdown.

The question I’m left with is “Why Greece?” Seriously. Greece’s ratio is 174%. That’s pretty high, but not at the top of the European Union’s list. In fact, it’s tenth. The nine countries ahead of Greece on the debt wagon train are Luxembourg (3443%), Ireland (1165%) [no, those are not misprints, they are four digit percentages], the United Kingdom (400%), Belgium (266%), Portugal (217%), Austria (200%), Sweden (187%), France (182%), and Denmark (180%).

The UK owes four times as much money as its economy produces in goods and services in a year. So, why isn’t the EU pushing the UK into bankruptcy? Why aren’t they demanding that the UK cut salaries by a third, slash its budget to nothingness, make people pay back money they earned last year, cutting the rug out from under the country? Why isn’t the UK’s credit rating in the toilet?  The news about Greece this week has been appalling with a retroactive 32% reduction in minimum wages and an expectation that people go without paychecks to implement that, and a new threat to reduce their credit rating.

The EU is threatening Ireland, Italy and Portugal as their next “austerity” victims. Notice, Luxembourg isn’t on the list. I could understand Ireland, which owes eleven times what it’s worth, but Italy’s debt ratio is only 108%, far below Germany’s 142%. Want to hear the wildest part about EU debt? Of the eleven countries below Germany, nine are former communist nations. Only Latvia has a higher debt than Germany. Go figure that one out.

Who the hell is making up these rules and why? Why does the UK get off, but Greece gets destroyed? Is the UK too big to fail? Who would benefit from foreclosing Greece?

That is not an outlandish question. Countries can be foreclosed. It happened to the Dominican Republic a hundred years ago. Is that what the EU is planning for Greece – foreclosure? Will the whole Parthenon go the way of the Elgin Marbles, into the British Museum? Or maybe they will figure out a way to seize all those Greek oil tankers and those island cruise ships.

Maybe Greece failed to be a good little country and elect a conservative government when the rest of the EU went all Bush-like. That is seriously the only thing I can think of. Our Republicans and conservatives keep saying that the EU’s crisis was caused by “socialist governments” but the big countries have conservative ones – the UK, France and Germany. Now, France’s Sarkozy is shifting gears and letting go of the austerity budget idea. It’s the hardcore conservatives – UK’s Cameron and Germany’s Merkel – who are pushing for everyone to lower taxes on the “job creators”and cut sending.

The United States is not on the brink of becoming Greece, no matter what the crews at Fox News and right wing talk radio say. We don’t answer to a greater power like the European Union. We can do, if we stick with President Obama and take control of the House and Senate, what has worked in the past – Keynesian economics. As for Greece, maybe the best way to save that country is for the Greeks to choose to get out of the EU instead of allowing themselves to be punished for have the tenth heaviest debt load on the Continent.

Now, could someone explain to me how Japan’s national debt, which was over 200% when the earthquake and tsunami hit, dropped to 45% now?




Share This Post