You’re probably in as much debt as the Greeks are
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Greece hasn’t exactly had an easy go of things lately. The country, which has been riddled with debt throughout the last decade, according to Vox, has needed bailouts and assistance from countries like Germany just to stay afloat and avoid total financial collapse.
Most recently, Greek Prime Minister Alexis Tsipras made a request for more bailout funds. Depending upon what happens with that request, Greece could either receive some reprieve from its lenders or see its banking system collapse, which would mean it no longer would be able to use the euro for its currency, according to The Associated Press.
Though the crisis in Greece is a world away, this may be something that Americans can empathize with, given that Greece’s financial troubles are eerily similar to modern American poverty issues and one of America’s darkest periods, the Great Depression — which shows that Greece and the United States may not be all that different after all.
But when you compare Greece's current crisis to the Great Depression, Greece may actually be worse off than the U.S. was during that time, according to The New York Times.
“Greece is in its own Great Depression. But unlike the United States, it won't be able to get back on its feet as quickly,” Jacob Funk Kirkegaard, an economist at the Peterson Institute for International Economics in Washington, told The New York Times. The country “is shackled by onerous rules and regulations, an aging population and a dysfunctional domestic political system … sharing important elements of sovereignty with its own creditors.”
Greece can’t afford to pay its bills, which was something that America, conversely, could afford to do because of World War II and military spending, according to The Times.
Similarly, America encouraged its people to seek employment and poured “billions of dollars into public jobs,” The Times reported. Meanwhile, Greece still has a 28 percent unemployment rate as of last year, with no signs of slowing down.
Greece’s stock market is also worse than America’s was back then, The Times reported. The market spiraled down to -89 percent during the the Great Depression’s later years in 1932, while Greece’s hit a low of -91 percent in June 2012.
But while Greece’s financial situation looks more troublesome than America’s did during the Great Depression, today's Americans appear worse off than the Greeks because of the United States' high amounts of debt and inability to get rid of that debt, according to Fortune.
“Whatever happens,” Fortune reported, “the average American may be worse off than Greece.”
In fact, Americans may have more debt based on income earned than the European country, Fortune reported. Greeks owe 1.77 euros for every euro they earn. Meanwhile, Americans owe $204,992 for every $55,192 they earn, Fortune reported. So while Greeks have a debt-to-income ratio of 177 percent, Americans’ sit at a whopping 370 percent, Fortune reported.
And Greece’s debt can be forgiven, unlike the debt of an average American. Fortune reported that if Greece gets rescued from lenders and exits the eurozone, then Greeks won’t have any more debt. Meanwhile, Americans, even when they declare bankruptcy, still hold onto some debts, like student loans and housing debt.
Greece can also print its own money, assuming it has to leave the eurozone, according to Fortune. Though this could cause inflation in the country, it will allow them to avoid a financial crisis and survive in the meantime, Fortune reported. But indebted Americans can’t print their own currency, which means U.S. citizens always have to pay back their debt.
All of this points to the fact that the United States and Greece today have a lot in common, according to USA Today's editorial board. More than just their debt similarities, both countries have aging populations and “irresponsible banks lending to irresponsible borrowers,” USA Today said.
Greece, though, is just a few years ahead of the United States. If America doesn’t realize these similarities, the United States could soon face a tragedy much like Greece’s in the future, USA Today said.
“America is heading for its own debt crisis,” USA Today said. “It won't be complicated by whether it should drop out of a currency union. And it might be delayed by a vibrant and innovative private sector. But it could arrive in as little as a decade. And then everything will seem Greek to us.”
Send Herb Scribner an email at hscribner@deseretdigital.com or follow him on Twitter @herbscribner.
