Greece National Debt

If there is one country that has brought what can happen with an out of control national debt, it is Greece. In this article, we take a look at the Greece national debt implications

Greek Debt Crisis

The political discourse in the United States is such that many argue that we have plenty of time to deal with our national debt problem. The situation in Greece would seem to suggest differently. The Greece national debt doesn’t necessarily indicate when our debt will become a problem, but what it does clear show is that the crisis happens quickly and the resolutions to it are simply brutal.

Debt Level

Greece has a national debt level well in excess of $400 billion dollars. That may not sound like a lot compared to the United States, but keep in mind this represents about 143 percent of the countries gross domestic product level as of 2010 with the percentage expected to rise above 150 percent in 2011 if nothing is done. Anything above 100 percent is considered very concerning. In contrast, the United States is currently just under 100 percent and trying to deal with our debt problems now.

Austerity

The only answer Greece really has to deal with its national debt problem is to simply slash all spending. The problem is many people rely on that spending to get through daily life. The end result is what you see on the news. There are riots and massive unrest as people react to being deprived of the benefits that they were promised for years and have come to rely on. It is the equivalent of taking a senior living on Social Security and telling them that they will no longer receive a monthly check. They have nowhere to go and that breeds unrest.

Lesson

What is the lesson of the Greece national debt? Well, the obvious one is to not go heavily in debt. That lesson has already been ignored in the United States, so is there anything else we can learn? The answer is yes. Dealing with a national debt problem is very difficult, but it is much better to deal with it before a crisis happens so you can soften the blows of spending cuts and tax hikes. Waiting for a crisis just makes everything more severe.

The Greece national debt crisis should be a huge wake up call for countries around the world. Frankly, there are many countries in worse financial shape, so don’t mock the Greeks.

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