Other than just “they’re broke,” most people don’t know/care/get what the problem is. Seth Meyers painted a surprisingly accurate picture on SNL this weekend. Check it out.
Sidebar: That was the best (and longest) Weekend Update I’ve ever seen. Can we just make it the Bill Hader & Kristen Wiig Variety Show? Because I really don’t need anybody else.
Anyway, if you need more details about Greece, lemme paint it out for you as best I can. Because if anybody knows about being broke, it’s this guy right here.
In a nutshell, Greece borrowed a ton of money from the other Eurozone countries and they can’t pay it back. Greece gave up the drachma in 2003 and switched over to the Euro. And then they went buckwild. They pretty much took out gobs and gobs of loans from banks in countries like France and Germany and they went on an internal spending spree. Remember the Athens Olympics? Yeah, they went billions of dollars over budget building fancy things for that, just one example of their shopping habits. Plus, they weren’t the most economically sound group of people in the first place. Their citizens retire basically as soon as they start working and their public servants get paid a lot of money. And the Greeks are famous for tax evasion. That’s all well and good for The People, but that also means not a lot of revenue is pouring into the government while the government is pouring a lot of revenue into the people.
And the people are comfortable. They have their whole Greek Way Of Life thing, where everybody is so relaxed and retired and aging gracefully. Well, Greece is over $300 billion in debt (which is a big number considering more people live in the NY metropolitan area than in the whole country of Greece) and it’s time to pay up. After the Lehmans sent the whole globe into a downward spiral of financial despair in 2008, banks all over were like “hold up, let’s get our bank up to speed” and they’re calling in some debts. But Greece has no money and no income.
They have two options: compromise with the EU with a payment plan and some changes to their goverment, or drop out of the Eurozone and go back to the drachma. The EU will accept 50% of the debt on a set payment plan in exchange for some compromises and austerity measures. The compromise includes things like slashing wages for the public sector, raising the retirement age, and making heavy cuts to social programs. The people are, understandably, Hell No on that, so a vote that was to be taken democratically has been shooed off the table and the heads of state are making the decisions.
For the Greek public, they don’t see a lot of drawbacks to dropping out of the EU. They can go back to their drachma, keep their low retirement age, and keep their high incomes. Of course, their drachma will be severely devalued globally, but that really only matters for goods you need to import. On the flip side, everything you export will be super cheap for other countries to buy, comparable with the goods coming out of China and India.
For the rest of the world, bad news. Greece is the biggest chunk of a huge iceberg that includes other countries with extreme debt to foreign countries like Italy and Spain. If Greece drops out of the EU and effectively says “sorry, we can’t pay back your Euros, bye guys,” what’s to stop a domino effect? Italy can go back to their lira and default on their loans as well. So the banks holding the loans—big important banks akin to German and French versions of the Lehman brothers—will be broke. And there’s another financial collapse just 3 years after America killed the world’s economy.
So the goal of The Planet is to get Greece to say they’ll pay back 50% of the loan, shape up their government (though it’ll be even more difficult to keep unemployment in check and grow their economy given the measures they’re expected to take), and stay in the EU.
But on the bright side, if they default, the prices on things there will really drop and it’ll be the best time to take a cheap Athens vacation. Assuming they stop rioting.