Every nation in the globe is in debt. Particularly in Europe things have turned ugly. The PIGS as many racists call Portugal, Italy, Greece and Spain seem to be the problem, but the shiniest of all four is Greece. Media loves her, analysts do whatever possible to dug her and the hole world has a daily headache about how things are going to turn up and the questions is WHY? USA have 15 trillions of debt, UK 9 trillion, France and Germany about 4.7 trillion and still everyone points at Greece with only 530 million, what is the problem here?
Haircut, everybody wants one!
As you can see in a first glance a paradox appears but after a second reading, things are much simpler. The number of billions Greece pays in interests are about 18 Billion every year or 8.4% of GDP. As you can see in the following picture, USA pays 1.3% for interest as part of their GDP.
https://research.stlouisfed.org/
In other words, Greece pays about 6 times more for interests than USA. If USA had to pay the same amount of money it would be about 1.4 trillion in interests every year. Possible? No
So as we saw it's all about the sustainability of debt and not about the size. No if Greece needs a haircut or something else, it would be much better to talk about it in the next days.
So as we saw it's all about the sustainability of debt and not about the size. No if Greece needs a haircut or something else, it would be much better to talk about it in the next days.
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