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hey. What’s the deal with this European crisis
you remember the American banking crisis?
yes
same shenanigans, different continent.
you mean some idiot borrowed too much, some fool loaned it to them, and now some sucker has to bail everyone out?
yes, with the idiot being the governments, the fools being the banks, and the sucker being the taxpayer
how come the taxpayer always ends up the sucker?
because our governments are run by idiots and fools.
I hear Greece mentioned often
Greece is the most troubled European country because its government can no longer pay its bills.
isn’t the greek economy tiny?
yes, but thanks to the common euro currency, one small country can break everything.
why don’t they just kick Greece out?
that would hurt the integrity of the Euro.
so Greece gets a free pass?
yeah. Being a small Euro economy is like having a rich uncle who is willing to look the other way
if I had an uncle like that, I would never work hard.
then you would fit right in
what happens if Greece is not saved?
the banks that own their bonds might go under
didn’t the banks see this crisis coming?
no, they were too busy counting the bail out money from the last crisis to prepare for this one.
who is supposed to bail them out?
a special fund
where does the money for this fund come from?
All the governments in Europe, including Greece, italy and spain.
and who is allowed to receive money from it?
all the governments in Europe, including Greece, italy and spain.
how could that possibly work.
it can’t, but it sounds very nice. europeans love bad ideas that sound nice.
so who is really doing the bailing out?
france, germany and the international monetary fund.
Where does the I m f get its money?
Its biggest source of funding is the united states government.
isn’t the u s goverment broke?
only if you are an american school teacher
what if you are a greek school teacher?
then you have a new rich uncle, and his name is sam
how exactly are these bailouts structured?
they give loans to cash strapped governments, in exchange for those governments raising taxes and cutting services.
don’t these governments already have too much debt?
Yes
and aren’t their economies in deep recession?
Yes
and won’t raising taxes and cutting back services hurt their economies even more?
Yes
and with their economies getting even worse, won’t it be even harder to repay their debts, including the new bailout loans?
Yes, yes, and yes
how could the cure be more of the disease?
it can’t, so now you know why people are rioting in the streets.
but somebody must be benefiting from these rescue plans
its all designed to save the banks from their own follies
again?
again.
really?
Yes.
Like, didn’t we o through this already
indeed. government saves banks, blah blah blah, banks screw the people that saved them, etc etc etc.
so is anything about this crisis different?
well, for a few days the greek government considered doing something totally new and radical
what
a referendum to give the people the power to decide
who would consider a referendum in the birthplace of democracy radical?
many different global leaders expressed outrage at the very idea of a referendum
why?
there is a good chance the greek people would balk at the idea of taking on even more debt to have an even deeper recession.
so what would be the end result?
most likely a greek default, and abrupt departure from the euro
would that be a better scenario for the greek people?
maybe down the road, but not in the short term. an abrupt default would be extremely bad for the greek economy, although afterwards they can start the healing process
so what it all comes down to is suffering now versus suffering later.
right. back during the 2008 crisis the world chose suffering later.
and what became of it?
it is almost the year 2012
so?
Later has arrived.
are you telling me there are people that forget the future eventually becomes the present?
There is currently a continent full of them
what if they manage to temporarily contain the situation in greece?
then they would have to deal with italy
and what if they manage to contain italy?
then they have to deal with germany
I thought germany had the strongest european economy
it does, but by the time its done bailing out greece and italy it will need its own rescue
who else is left?
the European central bank
what can they do?
print euros
has printing money to solve a debt problem ever worked?
No, but that’s never stopped anyone from trying.
