How could Greece leave the EU if they owe 20 Billion to the European Bank and a couple of hundred Billion to individual European countries?
They are stuck there because of the debt, if they left the EU they would have gone bankrupt.
They are stuck there because of the debt, if they left the EU they would have gone bankrupt.
[1] https://www.imf.org/external/pubs/ft/scr/2016/cr16130.pdf
And of course, the ECB would have to write off a massive amount of debt (about 1.5% of Eurozone total debt), which would devalue the Euro. A lot of Euro banks that bought Greece's debt because it was backed by the Eurozone and still had high interest rates (in a sort of carry trade) would go bankrupt. Because that's the big secret, of course. A Greek bankruptcy would be far worse for other countries, especially Eurozone countries, then it would be for Greece [1].
As an American you should appreciate the situation Greece is in. Greece's economy is destroyed, because of externally imposed taxes that cannot possibly work. I am saying, maybe Greece should have a little Tea Party. I am scared to think of how badly Europe is currently being perceived in any of the PIIGS countries, but in Greece it's probably by far the worst.
[1] https://www.youtube.com/watch?v=mxXKDaIKkhk (worth watching, even if you don't care about the reference itself)
For instance, they are a country of only 11 million yet they had multiple presidential jets. In most countries of a similar size the politicians either fly on airforce planes or fly commercial airlines.
I know bankruptcy means different things in different countries, when I worked in the US it appeared as though it was relatively common place. At least if you paid attention to the ads on the radio, here in NZ it's less common and has more of a stigma around it so there is obviously a cultural viewpoint on how acceptable bankruptcy would be.
The thing is that the German (and French, and Italian) people loaned Greece that money, these countries all have a high debt ratio and therefore any money they pay for the Greek debt would be added to their own. They are borrowing money to pay for other peoples loans. Now I know that it isn't as simple as that, a lot of debt for the bigger countries is domestic debt, they've borrowed from themselves to pay another country in order to pay back to themselves. But on the actual balance sheet its a net loss for the tax payer.
What I really want to know is how all of these countries have let themselves get into this state. Pretty much every country in the west is hovering around 100% debt to GDP or over. the only exceptions being Sweden, Norway, Switzerland, New Zealand, and Australia.
I just look at this map and wonder how anybodies lifestyle is sustainable: https://en.wikipedia.org/wiki/Debt-to-GDP_ratio#/media/File:...
The real issue that German banks were overleveraged before 2008, so normally the crisis would have destroyed them. Germany did not want inflation, so in order to fix their banks they removed the limits on leverage, and Deutsche Bank (not the German national bank, just a very big German bank). Greece defaulting would bring the banks to the very edge of bankruptcy, perhaps to the point where one big customer default would kill them. Then they forced QE (do you know that every European loans ~100 euro to banks and large companies every month ? That's what it currently seems to take to prevent German (and other) banks from falling over, and Draghi has already announced "a massive increase" to compensate for Brexit). Of course it was all for naught: the stock market performance of the last year or so has done that anyway.
So now they're in "double or nothing" mode. They're doubling down. Tripling down. Just to avoid default. Germany has done malinvestment on a huge scale, and now they're using their political and financial power to fix it. But they're long past the point where they won't get repaid. They're at the point where they're trying to avoid an immediate total crisis, and it certainly looks like they're losing the battle. I doubt this Brexit event helped.
Like many other countries, Germany has a vastly underfunded bank default insurance scheme. It might surprise you to learn that no country has ever paid out their default insurance for a big bank. So I'm being harder on Germany here than I should be : the US has taken crazy measures to prevent bank defaults as well.
As you say, Greece's debt until this German exploitation began was not that spectacular (comparable to Italy and Spain, and not that much worse than German debt even). So criticizing their spending habits delivers arguments that you can hold against almost every western country. Obama, for instance, has not been very concerned with getting into more debt. And a US territory (not sure what the difference is with a state) has gone bankrupt (Puerto Rico). This definitely cost the US treasury. At least the US still has enough financial sense and backing to allow for a default (because there'll be US states going bankrupt in the years to come)