Image by ClareMarie via FlickrThe owner of a small local business goes to friends and family and asks for a loan to see his business through some hard times. Within one year he burns through the cash and runs the business into the ground. He goes back to the friends and family and asks for another loan. What should they do cut him off and let the business fail or lend him more money?The Greek Debt crisis is a lot like our businessman. The EU's single monetary policy rules required them to help it's member states. When Greece came into the European Union in 2001, it wasn't doing anything different than it's doing now. Only difference the economy was coming off a 10 year boom and money flowed freely. When money flows freely misjudgment and bad decisions are covered over.
Last Year
Fast forward to 2010, the IMF and EU loaned Athens 110 billion euros. Greece burned through it. One year later, the country is still facing ruin and still begging for cash. For the EU's central powers, Germany and France, there's no good way out of this. Again I ask the question, as in the businessman's predicament. What should the EU do with Greece let it fail or lend more money?
What is Greece doing wrong? Answer: Like the businessman no foundational change has occurred in thinking and planning. The borrowed money was just to fill the financial gas tank to get the the same broken down car down the road a little further. The money was wasted by the businessman and Greece.
If you want to help someone who is bad with money giving them a loan without a plan for them to change direction in behavior and thinking is doomed for failure. The Greek government has not done enough to implement austerity changes to its basic government planning. Like the Acropolis, Greece's economy is turning to rubble.
Most likely, Greece will get another loan or restructuring of it's debts. Only this time, the other European governments will not take no for an answer when demands are made for deep cuts in the government's budget and fiscal policy. The citizens of the European country's who are going to help Greece, will not stand for their government to help a bad risk like Greece. When Greece gets it's new loan and then they default again it could trigger a bank crisis worse than Lehman.
Like Greece and the businessman, the United States government is also going down the road of misjudgment and bad decisions. They are out of control with the insane national debt and yearly deficits. In Washington, it's business as usual. The economy is crippled by this debt and until it is turned around we will continue to see this painful unemployment. It's time to cut Greece, the businessman, and the United States off till they realize our financial problems are symptoms of a greater problem.
What is Greece doing wrong? Answer: Like the businessman no foundational change has occurred in thinking and planning. The borrowed money was just to fill the financial gas tank to get the the same broken down car down the road a little further. The money was wasted by the businessman and Greece.
If you want to help someone who is bad with money giving them a loan without a plan for them to change direction in behavior and thinking is doomed for failure. The Greek government has not done enough to implement austerity changes to its basic government planning. Like the Acropolis, Greece's economy is turning to rubble.
Bailout Time, Again!
Most likely, Greece will get another loan or restructuring of it's debts. Only this time, the other European governments will not take no for an answer when demands are made for deep cuts in the government's budget and fiscal policy. The citizens of the European country's who are going to help Greece, will not stand for their government to help a bad risk like Greece. When Greece gets it's new loan and then they default again it could trigger a bank crisis worse than Lehman.
Like Greece and the businessman, the United States government is also going down the road of misjudgment and bad decisions. They are out of control with the insane national debt and yearly deficits. In Washington, it's business as usual. The economy is crippled by this debt and until it is turned around we will continue to see this painful unemployment. It's time to cut Greece, the businessman, and the United States off till they realize our financial problems are symptoms of a greater problem.
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