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Greeks failure is unique

26/06/2012

To try to predict what will be, first we have to ask what really happened and will happen to Greece and Spain as debtor on one side, and what happened and will happen to Germany, France and other creditors from the other side?

As to Greece, since for 10 years it borrowed unlimitedly to increase the level of consumption of its citizens and nothing or very little it borrowed for investment, it not only did not increase the basis of its potential production capacity of merchantable products and services, but in contrary, it decreased it, by creating overpaid jobs in non merchantable service sector. Now when the creditors decided to stop borrowing more money (they give up the hope, they will ever be paid back) Greece has no basis to support these non merchantable services and has no alternative employment for those employed in these services.

As contrary to Greece, Spain is trapped in normal economic downturn, when one of his major industries, the real estate, that used to sell see shore dwellings mostly to foreign citizens, because of external economic crisis lost its customers. Yet Spain did not created nonfunctional economy, that can’t create add value, so it still has the capacity to heal.

As to the creditors, their economy is potentially robust, since in the past they had to supply Greece and other debtors within the EU with their merchandise. On the short term they have a problem to cope with enormous quantity of bad debts, they were paid with for their products. This means they or their bank system lost part of their assets and with it the equity, that was or will be restructured that or other way by the central banks. Now learned their lesson, they will try to channel their financial resources to more productive goals, than the Greek consumption or non merchantable services. This can only be for help to the healthy and strong economic entities, who existed before the crisis and still exists and are looking for markets alternative to Greece, that can pay for their products.

Sorry for the Greeks, but their failure is unique and is no precedent for anybody else. The Greek economic bomb was already neutralized for Europe.

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