The Greek/EU Debt Crisis and Us

Today the EU and IMF hammered out an agreement to loan Greece about $700 billion to try to staunch the financial crisis.  Since we had our own enormous banking crisis, I thought you might enjoy a few links.

The Washington Post has a nice article today explaining the most common myths of the Greek crisis.  (here.)  But, it forgot the most basic one: Greece is not being bailed out —  its creditors are.  They are mainly French, German, Swiss, and other big banks (and US banks, hedge funds, etc., for all we know).  It is a little annoying to hear the rest of Europe whine about paying for Greece’s mistakes when it is their banks who will benefit from them and the Greek public that will bear the huge pain of the costs.  

The crisis is by no means over, either.  Some people think the Euro is doomed.  (e.g., here and here), or that the crisis will spread around the world and cause another recession. 

What lessons should Americans draw from all this?  So far, the main one (or at least the main Fox News one) seem to be “govt debt = bad.”  It’s not that simple.  The recession caused most of the crisis, if not in Greece then the other endangered countries like Spain.  Maybe we should talk about cutting entitlements next schedule.  The hatchets are already being sharpened for the social safety net as a solution to our own debt crisis.

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