Now that banks and financial institutions seem to have weathered the perfect storm and are busy picking up the pieces, putting their houses in order, paying back the vast amounts of money lent to them by the state (read US) and paying out huge bonuses, a new crisis has reared its ugly head. Greece is on the brink of defaulting on its debt and technically going bankrupt. The thing is countries can’t go bankrupt, can they? Countries aren’t companies, after all, although one could argue the case convincingly that they have many points in common. Lehman Brothers was allowed to fail, whether that was justified or not is a matter for the history books, but in 2010’s grim reality Greece plc is no Lehman, however bitter the taste might be. There’s too much at stake:  Europe’s common currency has already been punished, driving down financial markets and scaring away investors. Not that long ago we were criticising the irresponsibility of our top bankers, now the shoe’s on the other foot and many of our beloved (sic) leaders should be doing some serious soul searching and checking out where their nearest job centre is. Enormous piles of debt have been, well, piled up and gross (in both senses) government debt as a percentage of GDP is forecast to rocket in the next year or so. Of course, some economies can deal with their debt better or more easily than others. For instance, Japan is able to tap into sources of money that Greece hasn’t got.

Apart from growing uncertainty about the future of the eurozone as we know it, the danger is that increasing sovereign debt is going to push down economic growth. It’s a vicious circle that can’t be squared: tax hikes leading to reduced consumer spending and investment. Austerity has become the watchword. Greece has proposed a strict austerity program, but will it be enough? And in time? For some, maybe it’s too little, too late and that’s why the only exit strategy from this labyrinth is a multi-billion Euro bail out.

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