Greece: The Modern Personal Finance Fable of our Times
Someone correct me if I am wrong but I think I am missing something in this entire debacle.
Greece borrowed billions of dollars because they needed the money to keep the country going and operated in debt.
In the 6 years that they borrowed all that money, they made changes, but none that significant enough to cut dependencies on cash flowing into their bank accounts.
As a result, they need MORE money to sustain the country.
… but they just voted “No” to having more money handed to them because it would come with more restrictions and austerity measures.
Let’s see if I can explain this with a more relatable situation.
TO PUT IT ANOTHER WAY…
It is like a teenager who has gone off to college.
She / He takes all this money saved from the Bank of Mom & Dad to pay for school and let’s pretend in this fantasy scenario, that they knew they would graduate with NO debt at all.
They enjoyed going to the movies, ordering in some Pad Thai once in a while, going to the bars every weekend and buying some new shoes on occasion; but figured this was reasonable considering it was what was necessary to live.
After all, it was all free since Mom and Dad were paying for it and they’d graduate with $0 in debt and get this fantastic 6-figure job which would solve all their problems.
Or find a rich boyfriend / girlfriend to sponge off on.
However, after they graduated, they didn’t quite get the job that they had angled for, and earned way less than what it took to keep their lifestyle going…. but didn’t really care because they would eventually get a promotion to 6-figures one day, right?
In the meantime, that’s what credit cards are for.
Cue the maxing out of credit cards to sustain their lifestyle.
Inevitably, 3 years later everything crashed because banks will only give you so much money before they turn off the facuet.
Now, they’re pretty much TAPPED OUT of funds and unable to make their next rent payment and are literally on the brink of being evicted & thrown out.
Bank of Mom & Dad then said:
“Oh oui petit chou, do not fret.
We will step in with some supplementary loans until you get out of your credit card debt. We’ll just need to get you to start budgeting and tracking your expenses, cut back on going out every weekend, and buy shoes a lot less often. You need to start living within your means.”
Mom & Dad give a huge loan, they clear off their cards and everything is kosher….. until it’s not.
Sure, they ate a bit of ramen at home instead of Pad Thai, and they would go out to the bars on the weekend but only buy ONE BEER instead of their regular 2 and a side of chicken wings, but life didn’t really…. change.
Cue the second maxing out of credit cards, and running back to Mom & Dad.
Bank of Mom & Dad then said:
“No problem my dear child, I will give you MORE money to live on for now, but this weekend drinking, eating out and buying shoes is going to have to stop. Completely.
Not only that, you’ll probably have to pick up a side hustle or two for a few years until you pay us back and are able to be financially independent.
Actually, we’ll even go on a nice little loan repayment plan so that it’s easier on you, but you need to make some drastic changes to your lifestyle.”
Cue: Temper Tantrum, where New-but-Financially-Dependent-Underearning-College-Grad-says:
“NOPE. I refuse your terms and do not want to take your money under those conditions. I vote NO to MORE austerity measures.”
…all the while thinking: If I throw this temper tantrum it can only end well. A) I will set an example for the rest of my siblings in how to act towards the parental units and B) I will get my way. Or at least, not have to give up my weekend beers.
Bank of Mom & Dad:
” Not cool. Actually, this is irresponsible, childish, unacceptable behaviour.
If you think we’re going to bend to all of your whims when you are the one about to be thrown to the wolves and evicted, not to mention unable to eat a proper meal unless you turn into a freegan to scrounge in garbage dumps, you’ve got another thing coming.
The wallet is closing. You have a very short window to apologize and come groveling for money. The one who holds the purse strings, holds all the power.”
….Uh oh. Now what?
Have I about summed up the Greek situation? Am I missing something here?
The Greek banks are closed.
They’re going to RUN OUT OF MONEY.
LITERALLY RUN OUT OF MONEY in the next day or so.
… and they think voting “No” to austerity measures is going to give them MORE power, pride and show a good example for the rest of the countries in Europe to follow?
I don’t think so.
There is going to be some serious reality checks coming up in the next few weeks as Greece realizes that they need money to keep their economy going, they aren’t making enough money (GDP) and/or cutting back enough (austerity measures) to be able to sustain themselves independently.
… but isn’t this true of all countries, not just Greece?
Aren’t all the countries in the world save for a few in Northern Europe (Denmark?) and countries like Singapore and China in Asia operating in the red?
Even Canada is in the red and we can’t seem to balance our books. The U.S. is worse.
Is the Emperor finally going to admit there aren’t any clothes?
I guess we’ll see. It just seems so incredibly clear that I can’t understand how these big brains up top can’t see what is going on.