Q&A Friday #107: When Will The Nations Bailing Out Greece Say “No More?”

Q&A Friday #107: When Will The Nations Bailing Out Greece Say “No More?”

Question: Those nations which have stepped in to bail out the Greeks have pretty clearly done so to protect the interests of their own banking sectors which are heavily invested in Greek debt. Do you foresee any circumstance in which the French and Germans will balk at any further bailouts? — Martin Hale

Answer: Greece just signed onto a new round of austerity measures and people are pretending like it’s a long-term fix. Unfortunately, that’s not so. The sad truth is that Greece is in such deep trouble already and the austerity measures are so unpopular, that it’s still very possible that it’s going to eventually go off of the Euro and default.

If that were the end of it, it would be bad enough.

However, Greece is just the tip of the spear. Ireland, Spain, Iceland, and Portugal may very well end up in the same fix down the line. At some point, the people who’ve been keeping Western Europe’s house in order are either going to run out of money or they’re just going to say “enough.” If and when that happens, it’s going to lead to a global economic disaster.

When? We don’t know. The timing is tough to predict, just like it’s tough to know exactly when the U.S. is going to bankrupt unless we make some major changes to the way we do business.

At this point, in Europe and in the United States, all we can do is desperately try to stave off a debt-driven disaster that could lead to a worldwide depression for as long as we can until the dam breaks or we somehow make it through.

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