The debt crisis in Greece is a terrible one; but it's one in which they ultimately brought upon themselves. What has happened and what is happening now in Greece is a result of their governments brazen inability to live within its means. As of now, the debt-to-GDP ratio is estimated to be around a 160%. For comparison, the debt-to-GDP ratio for the United States currently stands at around 62%.
Only a couple of weeks ago, Standard & Poor's lowered the Greek sovereign debt to a CCC rating, making it the lowest in the world. It was only a couple of days ago when large-scale riots broke out in Athens in response to a series of austerity measures that were accepted by the government in order to secure more loans from various EU members and the IMF. Ultimately, the only way that Greece will be able to save itself is if it defaults on its loans, and then proceeds to restructure its entitlement systems.
Does the Greek debt crisis bode ill for the Euro, and for the EU as a whole? I certainly believe that it does. Greece is just but one of many countries in the EU that are experiencing severe economic problems (Portugal, Italy, Ireland and Spain are also on the brink). Spain, by most reports, will be the next country to fall. And if that does happen, then there simply will not be enough money to bail them out. In my opinion, it's only a matter of time before the Euro collapses.
The lesson that we can gain from Greece is a rather simple one: STOP SPENDING MONEY THAT YOU DO NOT HAVE! I fear that the United States could have its own debt crisis soon, and if that happens, you better believe that it'll be infinitely worse than the crisis that the Greek's are now contending with.
Best,
Kip
Sources: http://www.infowars.com/the-greek-tragedy-could-engulf-many-more-european-states/, http://online.barrons.com/article/SB126584181497144099.html, http://en.wikipedia.org/wiki/Economy_of_Greece#2010-2011_debt_crisis
No comments:
Post a Comment