Smith: The Greek Tragedy And America

A bank employee distributes tags with queue positions to pensioners as they wait outside the main gate of the national bank of Greece in central Athens last week to withdraw a maximum of 120 euros ($134). A bank employee distributes tags with queue positions to pensioners as they wait outside the main gate of the national bank of Greece in central Athens last week to withdraw a maximum of 120 euros ($134).

By Robin Smith July 20, 2015 3 min read

Robin Smith

Greece, a country with a population of about 11 million citizens, has long been viewed as the crossroads of Europe, Asia, and Africa. Yet this diverse nation, with three seas bordering its mostly mountainous inland, finds itself at another crossroads these days, albeit a far less dignified one: financial insolvency.

The root of the Greek problem is simple: As the government budget kept growing to fund social services for its citizens, the tax base – or the working population and businesses who paid taxes – did not keep the same pace.

On June 30, 2015, Greece became the first developed nation to fail to make a scheduled debt payment on a loan given by the International Monetary Fund (IMF). This 188-member international organization – located in Washington, D.C. – works to protect against the instabilities of currencies, economies and loans covering national debt, among other purposes.

Greece possesses a long history of financial woes. Yet its populace, politicians and general public alike have lacked the integrity and courage to address the true source of their problems.

According to the Greek Ministry of Finance’s 2010 report, “Stability and Growth Program 2010,” published to address the already-blossoming crisis, “the output increased in nominal terms by 40 percent, while central government primary expenditures increased by 87 percent against an increase of only 31 percent in tax revenues.”