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Greece A Lesson in How to Bankrupt a Country and Blame It on Others

Greece A Lesson in How to Bankrupt a Country and Blame It on Others. Little Economic Growth, But Private Consumption Rose More Than a Third in a Decade—Debt Financed. Bank Credit to Households Rose Fast But Came Down with the Financial Crash.

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Greece A Lesson in How to Bankrupt a Country and Blame It on Others

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  1. GreeceA Lesson in How to Bankrupt a Country and Blame It on Others

  2. Little Economic Growth, But Private Consumption Rose More Than a Third in a Decade—Debt Financed

  3. Bank Credit to Households Rose Fast But Came Down with the Financial Crash

  4. As in U.S.: A Real Estate Boom—Debt Financing and People Felt Rich

  5. Easy Money Helped Drive Up Real Estate Prices 25% in 5 Years in Weak Economy

  6. Constant Trade Deficit: Euros Flowing Out of Greece to Buy Goods

  7. Greece Not Competitive Compared to Germany: Drachma dropped in 2001 to join the Euro—that hid economic weakness. Greeks could borrow at 5% in EU, not 18%.

  8. Recently - Falling GDP: Even Harder for Government to Pay Bondholders

  9. Long-Term High Unemployment Rising Even Higher

  10. Unemployment Up; Income Down; Government Revenues Fall

  11. Government Ran Deficits Every Year: Sold Bonds to Finance. Numbers are not true; real deficits larger.

  12. High Government Debt: Very Hard to Cover Interest Payments Alone

  13. Lenders Nervous: Can Greece Pay Debt?Interest Rate Rises Quickly

  14. Greece: Addressing the Problem?No, Government Just Keeps Growing

  15. To Make Matters Worse:Greece Is Very Corrupt Election Year—Collect fewer taxes to buy votes. Huge Black Economy—Sales done with no receipts, no tax collection—incentive to have small businesses off the books. Contract disputes do not go to court because courts so bad. National RR—100 m. Euro income; Expenses 700 m./yr. Avg. wage of RR workers: 65,000 Euros Public schools—4x more teachers per student than in Finland but quality terrible

  16. Very Weak Economy Supported by Government Spending Most doctors claim income under 12,000 Euros/yr. and pay no taxes—but they live in nice homes and own Porsches. By law—many jobs—men retire at 55; women at 50. Government borrowing never used for useful construction but wasted on over-paid bureaucrats. Government Debt: $400 billion officially (GDP is $300 billion), but actual debt is $1.2 trillion or $250,000 for each person in workforce. Much of debt is in pension obligations.

  17. Nothing is being cut: Public benefits are expanding In 2012—public disability benefits expanded to include pedophiles, exhibitionists, kleptomaniacs, pyromaniacs, compulsive gamblers, fetishists, and sadomasochists.

  18. Who is next?

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