Since I’m a firm believer that history repeats itself, I got to wondering how things turned out in the past for economies facing our current challenges.

Fortunately, I didn’t have to go too far back in time to find out.  I did, however, have to go overseas.

The Greeks are in much the same boat we are in the States, although their ship has taken on a bit more water.

The Greek government has pushed social welfare programs that they can’t seem to find the funds for.  The budget deficit will be more than 12% of GDP this year, and the elected officials campaigned on extra spending, yet they now find themselves having to cut costs dramatically just to keep their head above water.

And to say the EU is a bit peeved is an understatement.

Since Greece is on the Euro, they really don’t have the ability to print money like the U.S. does.  The European Central Bank is suggesting that the Greeks, among other European countries, are on the verge losing their credibility, adding that it could stall the recovery process.

The rest of the countries on the Euro will be on the hook to bail out Greece or cut them loose from the currency all together (a rather unsettling proposition).  If the Germans, French and English will be forced to bail out Greece, you can bet it will be with some very unfavorable terms.  Screw me once, shame on you, screw me twice…

The total national debt in Greece is expected to increase from 99% of GDP to 135% by 2011 without significant cuts in spending. Compare this to a ratio of 90% for the U.S. and rising to over 101% by 2011.

The elected George Papandreou instituted a pay freeze for state workers earning more than  €2,000 a month which did nothing but cause an uproar within the Hellenic Socialists party.

The U.S. has some eerily similar financial stats as compared to Greece.  The one thing we can do that they can’t is print money and expect the general population to underwrite the transaction.

I suspect the underwriters of the U.S. national debt will not be happy.  Just ask the French… and Germans… and English…

Economics, Finance debt, Economics, Greece, national debt