The Greasy mess of Greece

Greece government kept taking loan from banks and countries.

And kept spending on planned and non-planned expenses.

Now, its revenues are not sufficient to pay back those debts after meeting its own expenses.

It may default in its payment to banks and fellow countries.

If this happens those banks and lending countries will not be able to pay back the money of their depositors.

If their depositors' money is 'lost', they may further default to their lenders.

Then their lenders will not be able to pay back their own depositors...

This will have chain reaction, spiralling effect.

In such a situation, no bank will lend Greece more money to pay back debt, that too when Government's bonds have become "junk"!

and mind you, Greece can't just print more money to pay back debt.

Its lenders want payback in Euros! They don't want "junk" Greek currency!

So, what are the options.

One option, Greece declares Bankruptcy!

It will not want that to happen!

Other's won't let that happen!

So?

Another possible and practical option is that European Union (EU) lends big fat loan to Greece to payback its loans to banks and countries!

EU will do so to protect itself from the chain reaction disaster.

But EU's concern is when and how and whether Greece will pay them back this bailout loan.

Otherwise the problem will boomerang again harder!

Afterall, EU nations have to pay back their lender banks and countries and control their money supply to contain inflation!

So, Greece would have to generate trust with EU that it will pay EU back.

How?

Greece would have to drastically increase its revenues, drastically reduce its expenses and pay back.

This would mean more taxes, painful drastically less expenditure by government on welfare and maintenance expenses besides painful cutting of all grandeur and perks to its employees and beneficiaries.....

This explains why the Greeks are out with violent protests...

There is a Greece in everyone of us.

and in the world.

Rather, every country has a portion of "Greece" in it.

US, Russia, China.....

Even India....

And don't forget our "friendly neighbourhood" Pakistan who keeps getting dollar bags from US to fight "Terrorism"!

Hope this explains why good economic management of the country is critical.

This effects you and me.

Literally.