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Sunday, May 30, 2010

The Greek Issue

The cash strapped European union this week has coughed up an amazingly large sum of money, $1T.
Why did they do it? 1 nation that has a history of poor financial decisions, and came close to bringing the entire
European economies to it's knees. Greece.
How did this all start you may wonder .. I'll tell you... in middle 2009 Financial watchdogs caught Greece fudging their numbers to obtain more credit, and promptly downgraded the country's credit.
Things went downhill from there , as it became more costly for the small nation to borrow money to continue wasting it. Recently a "I can;t pay my bills anymore" was issued by Athens, every one panicked.
How bad did it get?
Greece has a total debt of over $940B, paying over $25B in interest alone. That is not the problem. This poorest nation in Europe, with the highest poverty rate, takes in a little over $108B every year, but spends over $145B. This year alone the red ink is estimated at $40B-$50B.
What is the solution to this problem? The EU thinks it's a great idea to LOAN, again I say, LOAN Greece $160B, as long as the Greeks promise to cut spending by $30B a year.

Wow, what a great plan. Did any one ever mention the EU already gives this country $11B a year in aid?

Now some of you may be thinking that maybe things will turn around for Greece, and they can over come this debt problem. I have 2 issues with this line of thinking. The first is, this is not the first time Greece has ran into problems with out of control spending, in fact it is almost predictable when it will happen.The second issue I have is Greece has seemed to shun higher profit activities like manufacturing and tech, instead heavy relying on agriculture and tourism. In 2009 tourism in Greece brought in 138% more money than all their exports combined!

Greece is a serious mess. It is my personal opinion, the EU should cut them loose from the Euro currency before the country implodes, again. They are nothing but a huge liability, that seems never to learn from their mistakes, and LOANING a country with poor financial control, is a huge waste of money.

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