There is a lot going on in Greece right now. The country remains entrenched in a very serious financial crisis and, on Sunday, voted to reject a bailout from its international creditors (celebration pictured above).
Greece’s finance minister boldly resigned, its prime minister is in search of a new plan of attack, and the country may abandon the euro altogether, all while suffering the worst unemployment on the continent—worse than U.S. unemployment during the Great Depression, says The Washington Post.
How Greece got to this point is a long, complex story. But in a breakdown on his blog Interfluidity, cultural economist Steve Randy Waldman explains how Greece’s crisis came to be and what might be ahead, complete with straight talk, swear words and some charts.
If the past five years had not happened, I might be open to the argument made here that, having extended the maturity of a large quantity of debt far into the future, creditors’ position is more like equity, since the fraction of face value creditors eventually recover is dependent upon Greece’s long-term growth.
But we have had five years to observe creditors’ tender ministrations, under governments that complied with creditors’ every demand. This has been the result:
Euroelite apologists cite the small upturn at the very end of the graph to say, “See! Things were going swimmingly until the five-month old Syriza government screwed it all up. They just had to stick with the program! It was working! The darkest hour comes before the dawn!” These people, they are sophisticated highly educated people. You can trust them. Check out this track record:
While the western world waits to see what happens next, The European Central Bank said it will maintain current levels of emergency lending to prevent a collapse of Greece’s banking system.