Somebody has to pay

Money | The Greek debt crisis has no easy solution | Timothy Lamer

Associated Press/Photo by Petros Giannakouris

The problem with out-of-control government spending is that, at some point, somebody has to pay for it. Governments tend to ignore that fact, but Greece, over the last few weeks, provided a reminder that it cannot be ignored forever. The drama of street protests in Athens and angry remarks from leaders across Europe is largely an exercise in determining who will pay for years of Greek profligacy. Nobody wants to pay, but somebody must.

The crisis was brought on by a swelling Greek budget deficit and national debt, which have grown to almost 13 percent and 113 percent of GDP, respectively. These numbers raised the possibility of the Greek government defaulting on its debt. Such a move would shake confidence in the European Union and the euro, and so other EU nations, especially financial leader Germany, demanded budgetary reform.