(B) John Cassidy from the New Yorker has written a good summary of the true story of the Greek debt and today’s Greek historical vote against austerity. Mr. Cassidy’s article “Greece’s Debt Burden: the Truth Finally Emerges” well outlines what has been known for a long time both by the European leaders and the IMF that the Greek debt was “unsustainable”.
But all European political leaders were “concerned that writing off some of Greece’s debts would set a precedent for other heavily indebted countries, such as Ireland, Italy, and Portugal. Rather than going down that route, they stuck to the fiction that Greece, if it embraced austerity and structural reform, would eventually be able to pay down all of its loans—a strategy widely known as extend and pretend.”
And today as Mr. Cassidy articulates in “A Historic Greek Vote Against Austerity”, the “vote was a political victory, not an economic one. Greece is still broke, and its banks are still closed.”
The New York Times “Greece’s Debt Crisis Explained” has a few charts about “Whom Greece Owns” and “European countries’ debts as a percentage of their GDP”.
Germany, France, Italy, and Spain are the European countries that own most of the Greek debt.
Note as well the number of countries that have debt close or above 100% of their GDP including France and Britain. History could repeat itself one more time: “The public debts of the developed nations could well lead to the next financial crisis”.
In the meantime, I am still wondering “What will it take for Europe to wake up one day?”.
Note: The picture above is The Parthenon under Restoration in 2008 from Neokortex (licensed under CC via Wikimedia Commons).
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