Guardian
July 21, 2011
It has all become a bit familiar. TV pictures of Angela Merkel and Nicolas Sarkozy arriving in Brussels in an attempt to sort out Greece's problems. The air is thick with talk of debt-to-GDP ratios, bond yields, haircuts, but what does it all mean?
Well, think of it this way. Imagine someone you know who is not really poor but not exactly rich either. Their annual income is £20,000, a bit below the average for the people living in your street. Now imagine that your neighbour has quietly accumulated debts of £30,000 over the years, and told a few porkies along the way to get their credit card limit raised. Finally, imagine that the credit card company has turned nasty, and is demanding that the loans be paid off at an interest rate of 40%-plus.
That's Greece – a country that's better off than Bulgaria but not as well off as Germany – where debts are 150% of national income and where there is not the remotest hope of turning the financial position around.
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