Greek Debt is the fiscal tragedy of the times, and of the banks

In the article, Beware of Greeks Bearing Bonds, by Michael Lewis, a passage I found interesting was,“The Greek people never learned to pay their taxes .... because no one is ever punished. It’s like a gentleman not opening a door for a lady”. This passage shows how important law enforcement is to a country's well being. In order for a country to function, the laws put into place must be enforced, if not, anyone and everyone will take advantage of the system. This is shown in Greece when the author describes how everyone evades taxes, if the laws in place were enforced, all of the doctors in the country would go to prison. This lack of enforcing the laws lead to a society where fudging numbers is common place; the Greek government even did this when getting into the European Union. This continual breaking of laws led Greece to its economic downturn. The government and the people cheated their way into a financial ditch.

Greece's problems threaten the EEU because the financial rigor involved in joining the union gave investors and bankers a fake sense of security in Greece's financial stability. This caused other nations and private investors to loan money and put money into Greece and these groups will not be paid back. That is a significant loss for countries teetering on the edge of bankruptcy. Also, government bonds lost value which will cause the Euro will depreciate. This in turn causes any investment in Euros to decrease in purchasing power, thus affecting all of the countries using the Euro.

The formula for short run national income is, GDP=G+I+C+NX. With this bailout plan, government spending is reduced, lowering G, and taxes are raised, which takes money out of the pockets of people who could spend it, lowering C. This will cause overall GDP to decrease as well. The reason why people are opposing these measures are because:

1. People always want more money, raising taxes will cut into that.
2. A reduction in government spending encompasses many areas, like labor, wages, and public domain goods (roads, retirement, public education, etc). Obviously all of these will significantly affect the public. Any government worker will detest the lowering in wages and will not enjoy layoffs. Any person with children will not enjoy the public school quality decreasing (even more) and any older person will dislike retirement ages being older. This policy will affect everyone in Greece.