Home » The Greece Crisis: Could it Happen Here?

The Greece Crisis: Could it Happen Here?

The Greece Crisis: Could it Happen Here?

The Greece Crisis: Could it Happen Here?
The Greece Crisis: Could it Happen Here?

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.


    • Laurie says:

      I couldn’t agree more, Brian! SO many people don’t believe in “worst case” preparation plans, but I’d rather be over-prepared than under-prepared any day.

  1. Bill says:

    Its so sad and frustrating, especially to a family who have saved for a long time and cant withdraw due to lack of cash.

  2. Janeen says:

    Yes, yes, and yes. I had a small family blog and wrote a series about the debt crises in 2011. My mind was blown that the country had a deficit of $14 trillion. We began to prepare monetarily and physically for the possibility that the country might someday experience a crises. Now it’s amazing that we’re up past $18 trillion and there is no plan on the horizon to ever reduce government spending (or increase income) enough to pay it down. Congress seems content to allow the deficit to grow. I don’t live in fear. I imagine there’s a peacefully way that this could all play out, but I still make sure that we have some plans in place in case it doesn’t end well.

    • Laurie says:

      Well said, Janeen!!!! We’re right there with you. We have a plan and will continue to work it. I sincerely hope the U.S. doesn’t experience a crisis, but won’t at all be surprised if it does, especially since the govt doesn’t seem to care at all about the growing deficit. Great comment!

  3. I’m an optimist regarding our country’s financial situation (less so about individual families’ financial situations). While the national debt numbers are troubling, we are in a position to reduce them tremendously in the coming years with some planning (cuts, judicious tax increases).

    • Laurie says:

      Yeah, but will that planning and those cuts ever come? And how much cutting/tax increasing would it take to pay off 18 trillion dollars? Some say it’s mathematically impossible. That being said, I envy your ever-optimism, my friend. 🙂

  4. Iforonwy says:

    Well the view from this side of the pond is that the people of Greece are suffering at the hand of those folk who took them into the single currency – the euro – around 2002 after overestimating the amount (some say 4 fold) the Greece had in reserve.

    The country saw it as a chance to live the high life as there was plenty more in the pot. Not so. So they needed help from the EU and European banks and now they want Greece to start paying back the loans. Greece have been refusing to do so.

    Too many folk, not the run of the mill folk in the street, but higher ups, have not been paying their taxes or at the most finding ways around paying them and so there is not the money going into the treasury.

    As it states in the article -“They also required Greece to overhaul its economy by streamlining the government, ending tax evasion and making Greece an easier place to do business.”

    Although the other European countries look like the bad guys in all this it means that there is less money for the citizens of their countries and in effect a proportion of their taxes have been going to keep Greece and its citizens.

    I fully agree that we should all be more prepared and responsible. As Mr Micawber said in Charles Dickens’ David Copperfield:-

    “Annual income twenty pounds, expenditure nineteen pounds, nineteen shillings and sixpence result happiness. Annual income twenty pounds, expenditure twenty pounds and sixpence result misery!”

    • Laurie says:

      Love that quote! I totally agree with everything you’ve said, Iforonwy. We’ve got similar stuff going on here, with both the govt and the people mismanaging funds and living the high life, never expecting the pauper to come calling and just getting by with minimum payments. I know: we were them. It’s so very easy to turn a blind eye, but eventually, the lenders want their money back, as well they should be able to get it. This is similar to what happened in the Great Depression. Que sera sera turned into Oh sh_t.

  5. Lizzy says:

    I am starting to keep cash around the house now. Are there any recommendations regarding how much and how to keep it safe? Thank you

    • Laurie says:

      Smart move, Lizzy. How much cash is up to you: I would say at least a grand. But make sure you do NOT tell anyone that doesn’t need to know, and to keep it in a safe, unsuspecting place. SO glad you are taking measures to prepare yourself, Lizzy!

  6. I’ve always loved your focus on preparing for the worst Laurie, whether it’s stockpiling food or otherwise. These things usually happen when you least expect it, so even if you’re a die-hard optimist, by preparing for the worst you can lead a very stress-free life and spend your energies focusing on what you can control yourself.

    • Laurie says:

      Great comment, Jason. It’s so true about preparedness. As we’ve seen from guest posts on this site, being prepared can make the difference between working to survive through trouble, and thriving in the midst of trouble.

  7. Tawcan says:

    That’s a scary thought if that happens in North America. I think both Canada and US are in good financial shapes for something like Greece to happen though.

    • Laurie says:

      Not sure about Canada, but America has 18 trillion in national debt and nearly 12 trillion in consumer debt. To me, that is a disaster waiting to happen. 🙁

      • Iforonwy says:

        I think that the USA need to look closely at China. A few years ago I read a book by James D Scurlock entitled Maxed Out. It outlined the scenario of how much China had invested in the USA. Those investments will come due one day and you only have to look at the situation in the Chinese stock market over the last week or so.

  8. My husband and his family are from Greece. My MIL headed over there this week to visit her family. This financial mess has been going on for years, many years. People trying to live above their means. Some people paying taxes while others didn’t. Too much inconsistency with their government. In one of our conversation about a year ago I asked why people weren’t getting ready for what was coming. I think every European countries knew what was going to happen except their citizen. People simply were not prepared nor cared until now. NOW is an issue, now is someone to blame. I really hope we learn something from this. I know we did.

    • Laurie says:

      Joyce, such wise words from someone who has witnessed first hand what this type of stuff can do. You’re so right, we need to prepare NOW.

  9. I hope it never happens in America especially in the next 40 years when I could be retiring. I just don’t know what to do. But, the Greece government should give what is right for their people. This elderly man deserves to get his wife’s pension.

    • Laurie says:

      Governments should always do what’s right, but often they don’t. This is why it’s vitally important to learn to care for/plan for yourself, as you are doing, my friend.

  10. kay ~ the barefoot minimalist says:

    Great suggestions, Laurie. I don’t think you’re paranoid at all. I think you are led. And I believe we would all do well to be led too.

  11. Mr. SSC says:

    That is a scary thought if it happened here, and I can’t imagine how crazy and out of hand things would get. We like to keep some cash on hand but differ in opinion of the amounts. Mrs. SSC Wanted some cash for emergencies and I said that sounds great, how much are you thinking? She replied, I don’t know, maybe $80? Lol Seriously, we both busted out laughing when I said, “what emergency costs $80?!” It was a pretty funny moment. But I agree some cash and stockpile of other supplies isn’t a bad thing to keep on hand.

    • Laurie says:

      LOL, funny. 🙂 I have this vision of you guys trying to figure out what exactly your $80 would get you. 🙂 But hey, it’s better than nothing, right? 🙂

  12. In a way it feels like Noah before the flood. Building that ark in preparation for the rains – all alone since nobody else believed it was coming. It’s a scary situation in Greece for sure, but I’m still hoping for the best. (Just not sure what that looks like.)

    • Laurie says:

      I hear you. The best would be that we would all wake up and smell the coffee about our financial situations if need be. Lord, let it be!

Comments are closed.