I see this stuff on the TV news, and the implication is always the same
— that the Greek people are lazy and don’t like to work.
But that can be reality, because Greece is a modern-day Nation-State.
Can any of you brains around here break down for me why the trouble
in Greece is influencing my 401k profits here in America???
Is this just the Banks and Wall Street inventing stories and using
Greece as another reason to screw us?
the really really short answer is that Greece spends to much and does not earn enough.
There are quite a number of contributing factors. In no particular order, some of those are:
the wellfare state: Greece has a fairly sophisticated wellfare system (moreso than the US, less than Germany or France). Although I don't claim to know the details, one of the aspects that has been most publicized is that the pension age for most civil servants is 55, whereas it is 65 in the rest of the EU. In other words, Greek taxpayers have to support 10 years worth of extra pension AND the average number of productive years of Greek civil servants is much lower.
Greece is an agricultural society, but is organized as an industrial one. That means the government is much larger than it needs to be in order to support Greek Society. Greece is also part of the Euro zone, which puts high demands on Greek budget and policy/spending
The tax system is not very effective. A significant part of the taxes are never collected. The government is effectively spending money it has on paper, but will probably never receive.
Greece misrepresented their budget to the European Commission, allowing the above situation to continue and worsen longer than would otherwise have been the case. The European Commission was less than rigorous in auditing the Greek budget, also worsening the situation.
Yup, the 'lazy Greek' thing is just a stereotype and shouldn't be taken as any kind of explanation for what's going on. The Greek people are a mix of incredibly hard-working people, some hangers-on and a whole spectrum of types inbetween, the same as the USA or UK or anywhere else.
However, Greece's government mishandled the country's economy. Arguably, other EU countries did not look into the Greek situation with as much vigour as they should have done at the time, but generally speaking the fault lies with the Greek governments (past and present) for allowing the situation to get out of control and not fix the problems during the good years. To be fair, other governments (like the UK, Italy, Spain etc) did exactly the same thing, but in their case their economies were much more robust, much larger and better-able to absorb the impact of the financial crisis (though only just, in some cases, and with the jury still out in others).
The reason why it's having a worldwide impact is that a Greek default would cost the European banks vast sums of money (they'd have to write off billions upon billions of euros), which in turn affects the world economy. Greece leaving the euro or being booted out could start a chain reaction that could lead to the dissolution of the euro as a currency, which would create immense uncertainty in the world financial markets and - possibly - lead to countries leaving the European Union. Some of this is rather fanciful doom-mongering, but fear and uncertainty is enough these days to send the markets reeling.
Can any of you brains around here break down for me why the trouble
in Greece is influencing my 401k profits here in America???Is this just the Banks and Wall Street inventing stories and using
Greece as another reason to screw us?
It doesn't address why this is affecting your 401k, but I thought that this article laid out how and why the Banks and Wall Street (well, actually, Germany) are screwing the Greeks pretty well.