The financial crisis that has crippled the Greek economy serves
as a cautionary tale against irresponsible spending. First, it
may be helpful to students to explain that government finances
are not much more difficult to calculate than the numbers in
one’s personal bank account. A country earns X and spends Y; Y
should not exceed X. Just as responsible borrowing and credit
are an important part of personal money-management skills,
countries should borrow only what they need to get by, under
strict rules of payback. Greece not only eschewed the rules of
responsible spending, the country also completely ignored the
rules of responsible borrowing. The result was catastrophic debt
that the country is unable to repay, potentially leading to
financial crises in the countries that loaned money to Greece.
The Greek financial trouble started decades ago when government
after government increased the size of the country’s payroll. A
“you scratch my back…” system rewarded supporters of the two
biggest political parties