As Prime Minister Thatcher once said:
. . . Socialist governments traditionally do make a financial mess. They always run out of other people's money. It's quite a characteristic of them.
Or, as well stated here:
The Greeks held their breath and jumped off the precipice. The Greek debt crisis, and the outcome of a No vote in the referendum, is a perfect example of politics trumping economics.Greece has the GNP of the U.S. state of Connecticut with 3.5x the population. See here, here and here.
Greece, Portugal, Spain, Italy and Ireland masked their debts to keep the illusion of solvency until the 2008 economic crisis eventually exposed their economic juggling. Greece was the first to collapse in 2009, and the first failure of the euro zone experiment. Five years of remorseless austerity has done little for the Greek economy. The only growth has been the debt.
Some nice analysis at Forbes The Future Of The Greek Economy:
The view that “monetary sovereignty” independence could be used wisely does not take into account that the type of government that has driven Greece to the edge of the cliff is not the type of government that would enact the reforms Greece needs to grow, including better tax collection, better infrastructure and a better business climate.and
As the economic health of Greece deteriorates, the need for new loans and harsher austerity measures increases. Greece cannot count on other nations to pay its debt through debt forgiveness. In 2012, other countries provided loans on attractive terms with below-market interest rates, extended maturities, deferral of interest payments, and rebates on interest. This is why the present value of Greece’s debt is actually a fraction of its face value.So, does Putin of Russia think he sees a crack in the NATO alliance caused by the Greek need for money? See this Barron's article More Than Economics at Stake in Greek Crisis Unlike Argentina or Thailand, Greece is a key NATO member. Opening for Putin?:
One alternative is for Russia’s Vladimir Putin to toss Greece a lifeline. That could potentially extend his sphere of influence and push back against Europe as effectively as his incursion into Crimea. This, of course, is all speculation.Nice warm-water ports you have there, Athens.
But Tsipras flew to Russia as recently in mid-June to confer with Putin. The Greek prime minister also has been an outspoken critic of the EU’s sanctions against Russia over the de facto annexation of eastern Ukraine. Meanwhile, the Russian economy and the ruble have rebounded despite the sanctions since the price of crude oil, the nation’s crucial export, has stabilized around $60 a barrel. As a reflection, the Market Vectors Russia exchange-traded fund (ticker: RSX ) is up 44% from its lows earlier this year. Putin would seem far from debilitated on the economic front.
Even though a Russian gambit is a long-shot outcome of the Greek crisis, the inherent problems of the euro remain.
Wait, you mean a Russian bailout would come with a price? TANSTAAFL, what's that?