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Beware of Greeks (& Irish) bearing bonds

This entertaining tract from Michael Lewis in Vanity Fair provides a fascinating glimpse of the stark extent of near collapse and bankruptcy – it may still happen – of the Greek economy.  $250,000 US indebtedness per working person, Greek government estimates of a public sector deficit of 3.7% of GDP that turned out to be 14%, a country that doesn’t believe in paying taxes where monks defraud the government and use people’s secret confessions to blackmail them.  Where corruption of public officials and others is so endemic that trust has universally vanished and everyone thinks ill olf each other. The monetary and fiscal policy solutions? There are none.

Thanks Bernd

Update: In comments FXH mentioned the correlate situation in Ireland.  By coincidence I read this fascinating account of Ireland in the WSJ that same evening. Debts of $50,000 US per head and a current public deficit of 30% of GDP.  Again fascinating reading for those who get a kick out of looking at car crashes and disasters in general. Important history too that should be absorbed by policy-makers everywhere.

6 comments to Beware of Greeks (& Irish) bearing bonds

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  • fxh

    something crazy going on with Irish gov bonds too

  • conrad

    Surely the Greeks will go bankrupt — It seems to me the more interesting question is whether some of the bigger European countries go bankrupt in the long run also. I think if I was German, I’d be wondering what benefits having a shared currency really have right now.

  • fxh

    I hear from friends (greeks) just back from Greece that its pretty bloody awful over there but that a lot of the problems are long standing so reform will be difficult.

    I was over in Ireland last year and it was not very good at all. A Few years ago I was over there and it was booming (bubble). People on public payroll have had to put in a n extra 15% of their wages to super and a few other measures which amount to pretty serious pay cuts.

    My impression was they never went through the sort of reform we had when tariffs and subsidies etc were cut here (in fact they had increased subsidies through EU) – – so that there is a lot of inefficiencies in the workforce. I could see it in the retail and hotel sector. Government controlled room rates in small village hotels! And small coffee shops with 4 people where here you might have 1 person doing it all. Only the bars will survive as they are small and well run.

  • observa

    And in Oz the current mob want to hock up every employed person to the tune of another $4k each for fast broadband after hocking them all up by that amount as of the end of the fin year. What can you say about these mad Keensians everywhere except that this will all end in tears?

  • Surely the Greeks will go bankrupt — It seems to me the more interesting question is whether some of the bigger European countries go bankrupt in the long run also. I think if I was German, I’d be wondering what benefits having a shared currency really have right now.

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