Vanity Fair magazine’s October 2010 article, Beware of Greeks Bearing Bonds, by Michael Lewis may still be the best perspective we have on the events finally crashing along the sunny Aegean and sending shock waves through the rest of the continent.
Events? Do we call them economic? Financial? Political? Social? Moral? Cataclysmic? Truly tragic, as in “taking on the gods and bearing the consequences”?
The Greeks aren’t alone in trying to make sense of money issues. Apart from monetary policy itself – a highly esoteric field – any discussion of money soon wades into emotionally laden assumptions regarding wealth, possessions, time, labor, even food or family or religion. These are the grist of my ongoing Talking Money series at Chicken Farmer I Still Love You. I hope you join in — the category can be found under the Contents tab.
One of the easily overlooked realities about money is that it is essentially an elaborate IOU – one that allows us to store excess productivity or labor over time and space. Eventually, though, any promises come due, and you better have something that will back the debt up. That’s as true for nations that print the bills or banks that move them about as it is for individuals. And that’s what we’re seeing in Greece.
As I write this, I have no way of anticipating what will play out. The lack of a single nation to enforce the necessary regulations that would back the euro had me skeptical of its success from the very beginning, though I’ve long admitted to being a neo-Luddite. Still, the history of state-issued currencies in the United States in the aftermath of the Revolutionary War illustrates the pitfalls of currency that is insufficiently backed up. Prudent Pennsylvania proved to be the big exception to the trend and maintained its value.
We watch the present drama, then, hoping the action remains confined to the stage in the amphitheater. There are no guarantees – no double your money back – for anyone as the plot thickens.
Any predictions? Or counsel? We’re all eyes and ears.
Jnana's Red Barn 
It’s complicated. I realize the Greeks must share a large part of the blame for this, but I fear the austerity demanded of them will only lead to further disintegration of their economy. We’ve learned nothing from the Weimar debacle, it seems.
Are there any viable alternatives other than austerity, one way or the other? The fact that 90 percent of Greek taxes go unpaid cannot continue — as the Germans note, Why should we pay it for them?
Fix the tax system, reduce government featherbedding, by all means. But demanding that debts impossible to pay be repaid is simply unrealistic. True, letting Greece just twist in the wind is an alternative. But even if we disregard the ethics of that (re: the complicity of the creditor nations in running up the debt) there are practical reasons for not doing that. Institutions and governments did not lend Greece that money because they were kind-hearted, but because they stood to profit from an economically viable Greece. That still holds true; what’s more, they stand to lose big from Greece’s collapse.