Open letter to German readers: What you were never told about Greece
Sure. I agree that (morally) the EU shouldn't have bailed out Greece. Greece cooked its books and Greek debt holders at the time of the bail out were suffering the consequences of lending to a fiscally irresponsible state.That being said, the world was uncertain as to how much economic damage had yet to be done, and by shoring up Greece it assuaged investor confidence across the western world. Personally I think that the level of debt in the developed world is completely unsustainable because it relies on population growth and productivity growth in a manner that will one day lead to a massive global failure / inflation, but my opinion isn't really the majority opinion on economics. Essentially Germany shored up Greece for Germany's own interests: stabilize the Euro and investor confidence in Europe.That being said, Greece can afford to pay back its debts. The current debt to GDP of Greece is 175%. Before the populist clowns looked like they were about to win the government, the interest rate on Greek debt was around 5 or 6%, which is affordable, and the longer it is paid, the lower that rate will go. Look at Canada during the 90s, the interest rates plummeted as soon as the government paid off 10 points of the debt to GDP ratio, just because the government gained investor confidence.Greek pensions and benefits are unsustainable. Greek tax rates, while nominally high, are not uniformly paid due to corruption. That is the real real reason Greece can't afford this debt burden. And frankly, if they are going to default, they should do so soon, since the world is at a high mark financially right now.