I would have thought that the basis of the Greek crisis was very simple: they were allowed, perhaps even encouraged, to borrow more money than they had the income to repay. When world wide crisis hit because our nice American cousins had fiddled with the banking system to hide the fact that they had lent billion of dollars to people who didn't have the income to repay the Greek crisis was an unfortunate side effect. In the end the same applies to a country as it does to a private person. The only difference is that Greece is being kept afloat to avoid it defaulting on its debts to the banks.
Then the US government let a couple of banks sink to the bottom of the bay, prosecuted a couple of people, and then propped up their banking system with loads of cash. This allowed the top executives to collect their bonuses and the rest has been swept under the carpet with no compensation for the banks in other parts of the world who had been nearly bankrupted by the bad faith of the US banks.
Sure there are many other reasons for the current economic crisis but in the end it is you and I that are paying for the saleries and bonuses of the fat cats in banking and politics.
The economists can fill it up with as many technical terms as they like but in the end it is the greed and manipulation of the rich and powerful (not all rich and powerful, thank goodness) that we ordinary people pay for.
Can I start by saying that I have nothing but sympathy for the poor suffering citizens of Greece.
Although it gives me no pleasure to be proved right, I was against the single currency from the outset, on the basis that it was (as is so often the way in the EU) a political vanity project rather than an economic one. At no stage when the Euro was created was it apparent how the Greek economy (amonst others) could ever be truly convergent with the German one. I don't understand why the EU always has to be in such a tearing hurry (and to hell with the details). In the 19th century, it took the German states 60 years to achieve a customs union, & they were much closer cuturally and economically than is modern europe.
Whilst it is evident that the ridiculous collaterized debt obligations fiasco was the thing which upset the apple cart and brought to an end the infinite availability of cheap credit, I'm afraid that I don't agree with the argument that evil bankers are responible for governments which have chosen to live way beyond their means (and the Greeks are far from alone in this). The political class have to take responsability for this.
The Greeks (like many of the less powerful economies in the Euro zone) were able to borrow huge amounts of money at rates of interest way below those which could be negotiated based on the strength of their economy. They were only able to do this because of to their association (through the Euro) with the full might and majesty of the German economy. When the manure hit the air conditioning they had no control over interest rates & were unable to devalue their currency. Logically speaking, IMHO their best solution would have been for them to come out of the Euro and default on the debt. The bailouts seem to have been mainly structured to stop German and French banks from dropping a massive bollock rather than to help the Greek people.
Sadly for the Greeks, their elected representatives have been, even by the standards of politicians, an unfortunate mix of venal, corrupt and incompetent. The money they borrowed was distributed in bribes to the electorate (boosting welfare payments & pensions, cutting retirement age), & splurged on projects such as the olympics, with tasty contracts going to their mates (who they were failing to oblige to pay their taxes) no doubt in return for tasty kickbacks. In short, it was like giving money to a tramp; the only question being which wall it ends up being pi$$ed up against.
