A Reflection on the Greek Default Crisis

By Samuel Phineas Upham

The crisis involving Greek National Debt began in the latter half of 2009, and it has been ongoing until just recently. At the beginning of August in 2015, the crisis finally showed signs of becoming a thing of the past. As of this writing, it appears that Greece has mostly navigated this turbulent time period. What remains, what was gained and what was lost are worth reflecting upon.

The Bigger Issues

Greece as a country only accounts for a little over 1% of the European GDP, so why was it so important to keep this country in the Union? There was some concern that if Greece exited the Eurozone, that other countries might follow suit.

Because more than half of the GDP already consists of government spending, Greece further contributes to this problem and shows no signs of stopping the downward slope. The European taxpayers, meanwhile, are on the hook for a debt they aren’t even publicly aware they’ll pay.

There is also the European Central Bank’s promise that bonds will always be paid whatever it takes, so long as countries remain within the Union. Some might see this as a free ticket for Greece to continue mismanaging its funds. Certainly Germany hopes for a different outcome.

Bigger Challenges

The idea that a unified Europe solves all ills might seem attractive, but is there evidence to support such theories? Other, more developed parts of the Union like Spain or France have also suffered from the threat of default. Those past challenges may only grow more intense as time passes.

Samuel Phineas Uphamis an investor from NYC and SF. You may contact Phin on his Samual Phineas Upham website or Twitter page.