Most all of us have seen the photo at the right; the photo of a crying elderly man, hurting for his country, and upset because he could not withdraw his wife’s pension check due to the lack of cash pertaining to the Greece crisis.
Here is some of what the man had to say as he was interviewed about his collapse on the city streets of Greece:
The 77-year-old told AFP that he had broken down because he “cannot stand to see my country in this distress”.
“That’s why I feel so beaten, more than for my own personal problems,” Chatzifotiadis said.
Recounting how he had gone from bank to bank in a futile attempt to collect his wife’s pension, Chatzifotiadis said when he was told at the fourth “that I could not get the money, I just collapsed”.
Both he and his wife, like many Greeks in the north of the country, had spent several years in Germany where he “worked very hard” in a coal mine and later a foundry.“I see my fellow citizens begging for a few cents to buy bread. I see more and more suicides. I am a sensitive person. I cannot stand to see my country in this situation,” he said.
You have to feel bad for the guy. He simply wants to get some of his own family’s hard-earned cash so that he can care for his wife. But the lack of reserves in the Greece financial system make that impossible.
So, for you and me, it’s not uncommon to wonder “Could that happen in America?” Or in Canada? Or in any of the world’s other prominent countries?
Before we answer that question, we have to ask ourselves another question, and that question is: What caused the Greek financial crisis?
This New York Times article explains:
Greece became the epicenter of Europe’s debt crisis after Wall Street imploded in 2008. With global financial markets still reeling, Greece announced in October 2009 that it had been understating its deficit figures for years, raising alarms about the soundness of Greek finances.
Suddenly, Greece was shut out from borrowing in the financial markets. By the spring of 2010, it was veering toward bankruptcy, which threatened to set off a new financial crisis.
To avert calamity, the so-called troika — the International Monetary Fund, the European Central Bank and the European Commission — issued the first of two international bailouts for Greece, which would eventually total more than 240 billion euros, or about $264 billion at today’s exchange rates.
The bailouts came with conditions. Lenders imposed harsh austerity terms, requiring deep budget cuts and steep tax increases. They also required Greece to overhaul its economy by streamlining the government, ending tax evasion and making Greece an easier place to do business.
Why didn’t the bailout help?
The money was supposed to buy Greece time to stabilize its finances and quell market fears that the euro union itself could break up. While it has helped, Greece’s economic problems haven’t gone away. The economy has shrunk by a quarter in five years, and unemployment is above 25 percent.
The bailout money mainly goes toward paying off Greece’s international loans, rather than making its way into the economy. And the government still has a staggering debt load that it cannot begin to pay down unless a recovery takes hold.
Could A Crisis Like the Greece Crisis Happen in America?
When pondering this question, three statements stuck out to me:
- Wall Street imploded
- understating its deficit figures (or at the very least, understating the severity of them)
- implementing bailouts
Just as a paycheck-to-paycheck, deep in debt, anorexic savings and retirement situation in a single family puts that family at risk for a looming financial crisis, a deep-in-debt, struggling citizenship in a country puts that country at risk for a looming financial crisis.
When a family or an individual is at risk for a looming financial crisis, it takes very little to put them from on the edge to over the edge. A job layoff, a large unexpected expense or a medical crisis can easily tip the scales and make that “just making it” lifestyle into a “we’re screwed” situation.
Similarly, in a country where there is massive amounts of both government debt and consumer debt, one push over the financial edge can turn things ugly real quick.
So many these days are talking about the American economy and how well it’s doing on the road to recovery. The market is thriving, spending is up. People feel happy and secure and are buying new cars, new house, etc, in celebration of the good times we’ve found ourselves in.
Call me a pessimist, but all I can see is bloated national debt (currently over 18 trillion – do you have ANY idea how much money “a trillion” is?), rising consumer debt and a pattern of denial about the risks of it all.
Here’s What You Can Do to Position Yourself in a More Secure Position Before a Crisis Hits Our Shores
We can’t necessarily do much about our government’s debt, but we can help make our own situations more secure in order to create a more stable situation for ourselves in case a crisis does hit our own shores. Here are some tips:
- Get your debt paid off ASAP. The less you owe, the less people have a hold over you
- Keep some cash on hand, in case banks close. You don’t want to be left with no options
- Stockpile supplies to last for at least six months in case a crisis incites riots and stores close
- Educate yourself on survival techniques for urban areas, so you can handle any direct threats to your safety.
As we in the Frugal Farmer family work to dump our debt, I can’t help but wonder if we’ll dump it in time. And I can’t help but wonder how we’ll feel, being in a safe financial position and watching others struggle. Just like the guy in the photo above, it hurts me to think of my country in that type of distress. So I share my oft-assumed “paranoid” warnings to others to get out of debt and get prepared. I do hope I’m wrong, and that a financial crisis won’t hit America’s – or anyone else’s – shores. But my gut tells me otherwise.