Greece Bailout: Things are so complicated in Europe; you would think you need a Ph.D. in economics to keep track of what’s going on. But at least with this video, you don’t. Learn more at:
I’m Garret Jones. I’m an Associate Professor of Economics at George Mason University. I’m going to try and boil it down to a ridiculously simple but accurate story. Imagine a frat boy: he’s going to college, he needs to borrow money to keep going. So he goes to his rich uncle and says, “Can I borrow some money for college?” And the uncle says, “If I’m going to lend you money, you have to keep your act together and I want to see that you’re making good grades. I’m going to make you sign a document.” Frat boy says, “I’ll sign on the dotted line, I’ll take the money. I’ll get it back to you in a couple of years.”
He goes to college. Instead of getting the B’s he promised, he’s getting C-plus and the occasional B-minus. His grades are below what he promised and he still needs more money and the uncle says, “Well you didn’t keep your promise last time should I believe that you’re going to be able to keep your promise in the future? I’m gonna have somebody check up on you every month in college and check on your grades.”
Now that’s totally humiliating to the college student, right? The frat boy says, “Hey, not only did I get okay grades, I majored in something really hard.”
You can see that’s kind of the Greeks feel, they were asked to do something incredibly difficult and even if they did only half of it, to them, they feel like, “Hey we passed a pretty tough test.”
The uncle, like the Europeans, are saying, I ask you to do something, you sign on the dotted line and you didn’t keep your promise. The Greeks are humiliated by having to change their ways; the Europeans don’t want to lender someone who keeps maybe half their promises.
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The Greece bailout has been a hot topic in the world of economics and finance for quite some time now. But what exactly is the Greece bailout and why is it important? In this article, we will give you the best explanation of the Greece bailout in just 90 seconds, courtesy of Learn Liberty.
The Greece bailout refers to a series of financial assistance packages given to Greece by the European Union (EU), the International Monetary Fund (IMF), and the European Central Bank (ECB) to help the country deal with its mounting debt crisis. The bailout started in 2010, when Greece faced the risk of defaulting on its debt payments. The bailout package was designed to provide Greece with financial stability and prevent the spread of the crisis to other EU countries.
The main reasons behind Greece’s debt crisis are excessive government spending and borrowing, along with a lack of structural reforms to the economy. Greece’s government had been running high budget deficits for many years, leading to a rapid accumulation of debt. When the global financial crisis hit in 2008, Greece’s economy was already fragile, and the crisis further worsened the situation.
The bailout package consisted of loans and financial assistance from the EU, IMF, and ECB. In return, Greece had to implement strict austerity measures, including deep spending cuts, tax hikes, and structural reforms to reduce government deficits and debt levels. These measures were highly unpopular and led to widespread protests and social unrest in Greece.
The Greece bailout has been a subject of controversy and debate. While some argue that the bailout was necessary to prevent a broader financial crisis in Europe, others criticize it for imposing harsh austerity measures that have had a devastating impact on the Greek economy and society. The bailout also raised questions about the sustainability of the Eurozone and the EU’s ability to manage financial crises.
In conclusion, the Greece bailout was a response to the country’s mounting debt crisis and aimed to provide financial stability and prevent the spread of the crisis to other EU countries. It involved a series of loans and financial assistance from the EU, IMF, and ECB, along with strict austerity measures imposed on Greece. The bailout has been highly controversial and has raised important questions about the future of the Eurozone and the EU’s handling of financial crises.
Lol. All of us in EU and US, and elsewhere are fratboys getting butfucked by our sick uncle Troika.
Haa! I'm Greek. You're grossly misinformed… at best. And you left out Goldman Sachs.
The Olympic Games should be held in Greece and nowhere else. It's their legacy.
Better for the Greek economy with the regular boost, better for other cities who push people out of their homes to build giant stadiums that are abandoned and fall to ruins one year later.
Actually, this is ridiculously over simplified for the following reasons. 1) The "Frat" boy has excessive debt burdens to begin with. 2) The conditions imposed on Frat boy are so excessive, given that he also has to fund his retired grandparents, unemployed parents and siblings etc. 3) One condition is that he must generate over 3% of growth in his own contracting economy and from the stagnant economies of his counterparts. 4) His main wealthy and competitive competitor can only dream of reaching 3% given the stagnant economy, etc. 5) Frat boy has had his profit bearing assets sold off to rich counterparts, etc.
Frat boy needs his debt burden cut, hi profit bearing assets, etc. returned so Frat boy can start his road to success safely on a secure basis.
But what were the Greeks asked to do?
I agree with the general stance but would like to make the following observations:
First of all, what the Eurozone has offered Greece by means of artificially low interest rates and large extensions to the maturation of the bonds is already equivalent to the reduction by half of the present value of the debt. (Let's not forget that after 40 years even the hard euro is devalued significantly, so that each euro you pay back then will be worth less than half the euro you borrow now.)
Secondly, it's one thing to improve the business environment in a country in order to motivate people to produce wealth, but it is another thing to play nice to the "global investor class". Which mostly operates in an unregulated environment, and sometimes acts like a modern pirate class that finds ways to earn wealth without producing anything useful. The respective costs are huge. The global financial crisis of 2008 which has done so much harm to the economies and thus to the people of the US and Europe was cause by the said "global investor class". Much of the global financial instability and risk is caused by the same.
In conclusion things are more complex. Policies in Greece and everywhere else must find the right balance between freedom and control, for we want people to produce wealth and not to get their hands on it through financial engineering and speculation, or even by playing entire countries against each other. Much must be improved on this front. Dianelos Georgoudis
And he is a professor economics? I don't think so
The lending of money at interest is the problem from the get go. If everyone attempts to payback their loan at the same time someone is going to have to default because not everyone will find the interest money. A hundred dollars loaned at 10% per annum, it's impossible to find the last $10.
Hence the system is rigged from the beginning to fail.
That's why today all the western countries under the IMF are all scrambling to repay their debt, but there is not enough money to go around. Since the gov't have been taught to be wasteful they are the one's to borrow more and more so that they keep the people's money available for the private loans outstanding.
It's not quite true. What the Greek government did is actually far worse. They actually lied multiple times to their "uncle" and NOW they're humiliated and put under the microscope.
This is nothing like what's actually happening.
IMHOM the thing missing here is that many of the Greek people are saying that did not borrow or promise anything, the politicians did and they are not me.
Shitty explanation.
First the "requests to keep with the grades" were actually economy stifling regulations coming in from Brussels. The Greek economy just couldn't absorb the massive regulatory pressure and started lagging behind.
Then the recession happened, which caused their economy to contract faster than the European average.
In response to contracting economically, their credit rating was lowered. This compounded the actual problem, but the creditors didn't care because they were inept.
Then these same creditors forced austerity measures which caused the Greek economy to contract even faster, causing the unemployment rate to essentially double overnight.
Then certain nations toyed with demanding full repayment of funds, which anyone can tell you isn't done.
Aaaaand as a final kick in the teeth, EU got Greece involved into sanctions with a dozen countries (from Iran to Russia) that Greek economy was depending on.
The proper analogy would be:
1. College student goes to creditor to ask for credit.
2. Creditor says "sure but only if you take a course that will make you unemployable" (the arbitrary business regulations)
3. College student agrees, graduates, and can't pay back the loan because the only job he could get is flipping burgers.
4. Creditor raises the students interest rate from 2% to 40%. (the derating)
5. College student still can't repay, obviously the debt grows geometrically.
6. Creditor says "We called your burger job, and we got you fired." (the austerity measures)
It's a really ridiculous grab job attempt, by lowering their credit rating the creditors thought they could get away with grabbing a larger amount of money. Instead they'll probably end up with about the same amount they would have had initially, but their inept greedy efforts completely ruined an entire nation.
Greece is a woman living in poverty. In 1981, she married a husband named European Union. Greece decided to go on shopping spree using EU's credit card. A few years after the two married, EU found out that Greece had tricked him in marrying her by falsifying financial documents. Greece turned out to have a lot more debt in addition to her new credit card debt.
When the banks came knocking on Greece's door, her husband, for the sake of the marriage, had no choice but to pay for her debt to temporarily keep Greece safe.
Her husband told Greece that there are conditions tied to his bailout money.
EU told Greece to stop spending so much and try to get a real job.
Greece happily obliged a couple times until she felt used and her freedom is restricted. So this time, she decided to say no to her husband's money. In fear of Greece's bad credit will affect his, it will effectively force EU to divorce Greece.
With no job, no rich husband, and no banks dare to loan her money, Greece will default on its credit card debt and declare bankruptcy.
She just signed off on her own death wish in exchange for her autonomy, like a runaway teenage girl who escapes from her parents only to face the fact that she can't party on forever, at least not without sustainable income.
Well the good uncle (Germany) Has never paid back their debt, when they went to college, and are know acting like a holy hardliner, with double standards, against the College boy (Greece). I just love capitalist logic in a statist society ^^
Too simplistic. Why is that that the floundering PIGS nations are the same nations that received EU development funds ? Why didn't the greek austerity measures work ? Why don't Greeks emigrate to other EU nations if it's so bad ?
This would be more accurate if you said the college student was the government, and all money to pay the loan back would be stolen from those it doesn't benefit.
This is so simplified it almost makes me dumb
You guys are freaking idiots
F*** Greece from Italy!we're always giving you money and also the EU.They are our ruin!Fortunately here there aren't any Greeks because you stay at your country in summer cause no money…but we prefer Western tourists 😉
Greeks are like 40 y.o sons that still live with their parents and still ask for money.
Well instead of using a student as an example, try using the hundreds of thousands that decide not to work and receive free money from their gov! Yay for socialism!
Nice try, but no. I'll give it a shot, but maybe a little more than 90 seconds: Kid borrows money, gets bad grades like the original. Money wasted, essentially. Uncle comes in with additional funds and forces kid to do 80 hours a week of community service and self-improvement classes on top of the full college course load to keep getting the money. Kid can't put enough time into classes because of those activities. His grades drop more. Uncle becomes more concerned, forcing an additional 15 hours of activities on the kid for money. Kid's grades are now straight up failing. He also realizes how impossible his situation is, and asks uncle for less strings attached. Uncle still doesn't trust kid, sees the downward spiral as evidence of the kid's incompetence, doesn't budge. Kid doesn't want to leave college cause he knows the benefits of being a degree. However, he is headed towards failing out and can't obtain money in a way that allows him to do well in college. But would he actually do well with an easier deal, or go back to his old ways? YOU DECIDE!
Correct. Socialism will fail.
The Germans Owe Greece from looting in WW2.
That's an agreed contract between the nations Little mentioned. It's the same as UK paying USA for the WW2 (Heavy metal and planes.) We paid it back a few years ago.
Greece has yet to be compensated by Germany.
This is the ultimate result of a socialist system in which paying taxes is voluntary. It's in everyone's best interest to sign up for as many services as possible, and NOT pay anything back in taxes. Of course everyone is going to do what is in their own best interests. To think otherwise is foolish and unrealistic, and the EU were fools to loan money to a member country with this sort of system in place.
I am no expert, but this how I see the Greece Situation: There is no such thing as a free lunch. The Greeks were riding off the prosperity of others and they were foolish to borrow more money they could pay back. A basic lesson that we'd all do well to live by is: Live within your means. What does that mean? It means buying only food you can afford. It means living in a modest home, owning a modest car and not eating at fancy restaurants all the time or indulging in expensive things such as theaters, videos games or other entertainment. It means only borrowing money in emergencies, not luxuries. It means saving, thriftiness and hard-work.
We'd all love to live in a fancy house, wear fancy clothes, drive a fancy car, but everything has a cost and ultimately Greeks, Americans, and all people will learn this.
was the hard thing the Greeks had to do?
Simplistic view…
The frat boy is the Government.
His organs are the people.
Frat boy drinks too much… the people pay for the consequences.
This channel has gone to shit
Learn Liberty = Learn obedience to the New World Order. This guy makes no attempt to explore the IMF angle, i.e. get nations in dept over their head then own them.
bullshit analogy. classic example of a scholar who was indoctrinated into justifying and rationalizing the bankters ways
Capitalism and Leftism = FAIL
Here come a bunch of left wing nationalists from Greece bitching about how hard they
have it, when they voted in every election for corrupt irresponsible governments.
By the way, the frat ;boy also misrepresented his high school grades just like Greece in the first place to get into the EU.
The best explanation of the Privat debt, when you have borrower name and agreement…
What a load of shit. The lazy college student analogy absolutely does NOT apply to the Greek situation. Very disappointing and juvenile analysis. Unsubscribing.
You missed the part when the uncle sets a ridiculous and unfair agreement with a high interest rate that the naive student signed.
associate professor of propaganda is a better title for you Garret
look at the thumbs up The sheeple still dont get it
Um… maybe I misread the title… the Greek Bailout is only the one lone?
I would have thought it would have been like this:
– The College Kid borrows money from the bank, fails to go to classes and flunks out, but refuses to payback the bank.
– The government says the banks must continue to give the College Kid more money for schools, though College Kid won't go.
– The College Kid then borrows money from his rich uncle until he can find a good paying job, but then doesn't work or look for work.
– The government tells the rich uncle to keep giving him money with no possible end.
– Then all the rich uncles are poor and need money to retire at age 40, so they demand the government give them the same deal their nephews got, but the government has no money to give or any rich people to tax, so they borrow money like the College Kid did…
Cue this video.
And, as Paul Harvey said, now you know the rest of the story.
I would like to hear the frat boys side before I buy this Simple Simon hit piece or better yet the scenario explained by John Perkins
Greek debt is unsustainable & bank who lent to them below 5% didn't take risk into the rate, which is not Greece's fault. It historically defaults on debt and should of defaulted although wanted to stay in the euro, which benefits Germany's exports with a weaker currency and Deutsche Bank holding a large proportion of Greek debt. Germany has forgotten about creditors giving them debt forgiveness after ww2.
What about the part where the Greek government did not actually get a loan from other European governments initially, but from private banks at a very high interest rate because there was considered to be a substantial risk of default. The German government then bailed out their banks, paying them the full value that the loans would be worth had they gotten lucky and not lost anything in their speculative lending. The Greek government then went on to insist that the Greek government (not led by the same people who originally agreed to take the loans) pay back the loan in full to them, to compensate them for bailing out their own banks. Further discussions of new loans or bailouts were not directed at helping the Greek people, but at making sure that the Greek government continued to pay interest on the loans owed to German.
Please enlighten us on why the EU is forcing another bailout??? Maybe because they know that this debt based system could begin to unwind if countries decided to opt out like Iceland did. Why do we continue to blame those that take the $ not those that lend it? The greek people voted against the bailout, but of course the EU spoke the truth, and said that voting is irrelevant when your indebted. It goes to show you who really runs the show. The banks. Majority of the bailout goes to the banks, which makes private debt public. Then the public fails to pay it again and the banks get land, assets and future earnings of the people. Crazy considering the people voted against it in the first place. Yes Greece is a socialistic country but bailing it out doesn't teach them how to correct their problems but it sure does enrich others. Cui Bono…..
Loans made in Debt Issuance Selective Distribution Economics are designed not to be paid back. The idea is perpetual debt.
Anyone who lends money to politicians deserves to be ripped off.
EU was a mistake.
Money, are talkiing about the fiat money? Oncle, are you talking about my oncle crook?
Unsub, bye bye Mr MASON
The problem is that the Greek people didn't see that money. Their government took it and squandered it, then the government folded and went far right…and now far left….
The problem is that the Greek government "signed on the dotted line" in the name of the Greek people, but NOW it's the Greek people that are expected to deal with the consequences and keep an agreement that they never authorized in the first place.
Another douche bag academic who thinks he knows everything.
90 seconds is too long…
Here is a shorter and more accurate version:
Socialism fails, because you will eventually run out of other people's money!