September 14, 2011
This morning when I read the Dutch internet newspaper 'De Telegraaf' there were many articles dealing with Greece and their economy. For many months the Dutch government has been trying to support that country with loans and recommendations (austerity measures). The general consensus was, as far as the Dutch government was concerned, if we help out Greece (loan money) everything will eventually be fine. Greece just has to get their economy in order, privatize sectors, raise the retirement age, increase taxation etc.
Well, it turns out that all those measures are in vain. Reports have surfaced that several Dutch banks already have plans in effect for when Greece goes bankrupt and are more or less counting on it. Even the ministry of Finance along with the Bank of the Netherlands and (the Bank of) Germany and their politicians are having high-level talks, according to reliable sources. My point is, is that this scenario - the bankruptcy of Greece - was hardly mentioned in previous months as a realistic scenario. Instead, money should be pumped into Greece and they'll be back on their feet in a few years. That was the pretty picture.
House of cards is what comes to mind. If Greece goes bankrupt, and from the looks of it it will, all those measures and all that money loaned to Greece would have been pointless. And when you really think about it, the economy of a nation or the world for that matter, is seemingly highly unpredictable with (austerity) measures sometimes being inadequate. Both politicians and economists can't predict what will happen next and are basically just preachers of money value who hope to inspire trust in the markets.
Economy resembles religion. We should not lose faith in something like money which ironically is created out of thin air. Otherwise stocks would plummet, markets would crash which all have a relative value when you really think about it. The real fear of economists is when people become 'money-atheists,' that's why they keep pumping money in lost causes just to uphold the belief in an economy. Greece isn't the problem, the real tragedy is when the economy fails and people lose faith.