Ambrose Evans-Pritchard: This is what a death spiral looks like. It is what can happen if you join a fixed exchange system, then take out very large debts in what amounts to a foreign currency, and then have simultaneous monetary and fiscal contraction imposed upon you.
Germany discovered this on the Gold Standard when it racked up external debt from 1925 to 1929 (owed to American bankers) in much the same way as Greece has done.
When the music stopped – ie. when the Fed raised rates from 1928 onwards – Germany blew apart in much the same way as Greece is blowing apart. This is not a cultural or anthropological issue. It is the mechanical consequence of capital flows into a country that cannot handle it, as Germany could not handle it in the late 1920s.
And look what occurred a decade later in Germany.No, I don’t think Greece will be sending panzer divisions over it’s borders but it does sow a great deal of social discontent on top of a general emigration from the country, which is a bit different than past emigrations that consisted of mainly of the poor and unskilled such as occurred in America in the early 1900’s. Who will be on the run will be those whose skills are highly in demand like doctors, lawyer, engineers and others like them.
i visited Greece about 20 years ago and found it and it’s people extremely beautiful and gracious. It’s sad to see it in its current condition