Greece is running out of money and nearing default on its debt. The debt crisis in Greece has been going on now for so long that they are having a tough time getting another bail-out. They owe roughly the equivalent of 350 billion dollars. The worst case scenario is a Greece default on that debt. Financial institutions all over the world would feel that default.
So, what is the solution for Greece? The prime minister of Greece announced that they would be seizing all cash from local governments. That would be like the United States government ordering each state to send in their available cash.
Greece don’t have enough money to pay for salaries, pensions, and their bond payments. Thus, they are now desperate enough to seize assets that belong to local government. This situation in Europe is starting to take a turn for the worst. The worst of it is that this seizure of cash only puts a small band-aid on a big wound. This seizure of assets would amount to the equivalent of roughly 2 billion dollars.
So what could be the result of these drastic measures?
(1) Civil War – You just can’t seize assets from other local governments and expect no one to react. It wouldn’t surprise me if we see the country revolt against the government and a major civil war start. After all, if things are going to get dire, what do the people of Greece have to lose?
(2) Greece imploding from within – Taking local government cash would only push local governments into trouble. Now they would be the ones not able to make important payments. This could cause Greece to implode from within.
(3) Greece defaulting on their debt, leaving the European Central Union and dropping the Euro – This would be the nuclear option that as I said earlier would be felt in financial markets all over the world. It would be unprecedented waters with unpredictable consequences.
(4) Dangerous Precedent for the rest of the world – Could there come a day when you see this happen in the US? All it takes are two different elements to play out. First, other countries smaller than the US practicing assets seizure. This would make it a more commonplace situation to occur. Second, all it takes are things to get desperate enough. Governments do desperate things in order to keep Government going. Politicians are always first in line to get paid and taken care of. This of course is often at the expense of its’ people.
You can’t fix a system that is broken. Greece is a broken system. Since 2012, they have been continually bailed out and once again find themselves on the brink. This is a Greek drama with a tragic ending on its’ way.