What the Greek economic collapse teaches us 65



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The other day I had a coffee with someone who was expressing concern about the strife in Greece with people lining up at ATMs. She was trying to understand why Greece is in so much trouble. I tried to explain it in simple economic terms.

Margaret Thatcher once said, “The problem with socialism is that eventually you run out of other people’s money”. In Greece’s case, “the goose that laid the golden egg”, is sterile. The “goose” is the IMF and the European Union. With a total debt of 352 billion euros and failing to make a 1.6 billion payment, Greece has defaulted. It is a bit like having a car loan balance of $50,000, and you did not make an $800 monthly payment.

As a country, Greece has been irresponsible. They have handed out all the perks of socialism with early paid retirement – at age 50 in many cases. At the same time, the workers try to do everything in their power to avoid paying taxes.

An Australian reporter some time ago, related how swimming pool owners in Athens put covers over their pools that look like grass. It is so helicopters flying overhead will not identify pool owners. You see, there is a pool tax. Then there is the issue of unemployment; overall it is 26% of adults and 51% of youths.

The viability of a country is dependent not only on the total debt but the ratio of tax money (revenue) coming in and expenditure going out. It is not dissimilar to our personal expenses. The greater the debt, the greater the interest payments and if there is a budget deficit, there is more and more shortfall, with more and more debt. The result is a vicious downward spiral.

Greece is not the only country with a huge debt. America is almost at Greek-like levels except that it has a huge economy and has been printing money. Here again, America is incurring more debt and postponing the day when it will have to deal with the debt and the resultant crisis.

It is not dissimilar to what happens on the personal level. Let’s say you incur debt on your credit card and have maxed it out. If you manage to get another credit card and add more debt, you will be in a financial crisis much as Greece is. To make matters worse, you make the minimal monthly payment on the card. By doing so and continuing to spend, your debt keeps piling up. How much sense does that make? Unfortunately, many people do so.


Live within your means

The state of your finances is a balance between your income and your outgoings. It is important that you budget for your lifestyle and allow some extra for savings if possible. If you need a new car at age 60, consider putting it off until you have saved the money. If you want to finance a $40,000 car, the interest payments will approximate $7500 over five years at current interest rates. That money has gone into the coffers of the bank. It could have been used to pay for most of a year’s supermarket bill. Don’t acquire “things” that are not within your means. If you buy on credit make sure that you can afford the item.

Decide on your retirement lifestyle

One of the major reasons people do not succeed in life is a lack of planning. You would not think of going on a road trip without looking at a road map, would you? You have to know where you are starting from and what is your ultimate destination.

What are you going to do in your “retirement”? Will you travel, start a part time business, look after grandchildren or do volunteer work? Once you have determined that, you can decide how much money you will need. After accounting for fixed costs such as housing, food and clothing, what else do you need? It is only then that you can determine how much income you need. The amount going out in expenditure needs to be less than this. Whether it is $40,000 or $100,000 a year, you must figure it out and write it down. Otherwise, you are guessing.


Planning is imperative, whether you are on a part pension or with no pension. Remember, statistically you have plenty of years ahead of you. Don’t end up like Greece into forced austerity.


Share your thoughts below.

Dr Ely Lazar and Dr Adele Thomas

  1. That Europe is in the grip of a bunch of unelected blood sucking ghouls that care very little for democracy and human dignity, and that have managed to hoodwink a few people on the planet to blame the victims of their crimes – that’s what the greek tragedy has taught me., #JESUISGREQUE

  2. Greece debt will not teach greens and alp lefties anything, they have a habit and policy of keeping a country and state totally in debt and living beyond its means.

    10 REPLY
    • Get off the band wagon. Look at the waste the LNP wasted. They have spent more in their first term than labor did in 6 years. They have more than doubled the deficit on their wasteful spending.
      You know, like limos and helicopters and war planes no one else wanted and 6 million dollar bullet proof cars and paying themselves allowances to sleep in their own homes. Do I need to say more…..

    • Gregory you are living in your head of past inter generational indoctrination. Politics are very different these days, we live in a different world. Even Labor has to change their policies to keep up & many Labor supporters have to accept change. By the Way regardless of what you say, the whole world admired the treasurer of the day that got Australia through the GFC. I can’t see this present one doing better.

    • Carol Stuart ! It was the money Howard left in the kitty that got Australia through the GFC , not the red head , where do you think she got the money from ? And she left us a debt we couldn’t jump over, then had the front to say ( in an interview ) she didn’t know it was so big ! What sort of PM says that ?

    • Carolyn Brown
      The money Howard left in the kitty he got by selling off our assets. It had nothing to do with good financial management.

    • Why does EVERY discussion have to deteriorate to ALP/LNP dingdong? There are good & stupid policies on both sides.

      1 REPLY
      • Maybe because if the ALP were still in we’d have the same runaway socialism that created the Greek situation.
        I was at a business today where they complained bitterly about the imposition that compliance place upon them in competing with overseas suppliers – who removed that protection – the ALP Government (Keating).
        Who doubled the portion of personal income tax paid by ordinary workers in a single government term – the ALP (Whitlam).
        The ALP Government has continued to show fiscal irresponsibility for decades with the only saving grace being that they are replaced by the LIBs who have to then introduce austere measures to pay off our debt and then the ALP gets elected and the cycle continues.

    • Thanks Christine, its amazing how easy it to gather the leftie trolls. Its a pity that Ruth, Carolyn, Carol and other socialistic leftie trolls are still fed on breast milk from the radicalised unions and not put up an unbiased fact of history.

    • Yes Bronwen there are good and stupid policies on both sides – no doubt, but australian political history reconfirms labour at local, state and federal level have been traditionally being the major debt creators. Only have to look at last ALP in government for 6 years who promised year after year about getting a surplus but never did, and spent way beyond their means and left a bigger debt each year that is still been realised 18 months out of office. Yes Mario, simplistic, but at the heart is socialistic policies only last until the borroowed money runs out as in case of Greece. Not aware of any union owned and union managed companies in Australia that are successful. The only way unions make money is to get ALP leaders doing side deals as billy shorten to short change workers and charge union fees , which no one has a choice not to pay.

    • Oh yes, Costello sold all our gold, Qantas, Kingsford Smith Airport & more, that’s why. Libs sell off our assets, Baird has already started.

  3. What it teaches me is that bankers and financiers will do everything they can, legal or illegal, moral or amoral, to maintain their heir apparent rights to control wealth along with ensure those whose wealth is at the lowest level continue to remain at the lowest level, and the number of people whose wealth is at the lowest level continues to grow

  4. Yes l do..manage on part pension & bit of Super…The folk who ask me how I can afford to travel are usually those who play the pokies.My entertainment is usually free..the beach, family dinners, community events. .

    3 REPLY
    • Yes Gillian am the same get pension and some super pension I remember I said to one of my boys I have to go and get wages out he said what do you want wages for I told him petrol money, shopping money ,Christmas shopping money holiday money, have always budgeted all my life am going away in August and a friend of mine said you going away again and I said yes could be going next year as well she was shocked simple just budget and live within your means not hard.

  5. It is a shame the government pay system leads to corrution because really if they only spent what they get in the country would not be in debt. In the government the more money you “HANDLE” the more pay you get.

  6. Yes, make a budget and stick to it. Makes life so much easier and means you can then afford little luxuries every now and then. My hubby and I have done loads of travelling while on very low wages all because we watched our pennies.

    2 REPLY
    • Absolutely Gillian! Funnily enough, a few folk who are much better off than us are a little bit envious of all we do but we don’t drink, smoke or buy expensive clothing. We drive a secondhand ten year old car which we look after and only looks a few years old, and because we don’t have a mortgage anymore, it means we can enjoy life and do those things we love. I always buy on sale – including holidays – so we win every time.
      Good on you for being sensible – hope you have a great life and get to enjoy the things you’ve been blessed with, too 🙂

  7. Goes to prove that tourism only helps a few and not the whole population. One thing Greece have never been short of in my life time is tourists.

  8. It means that Australian tax payers cannot afford to pay for the junkets and treats at the trough our politicians enjoy. Slash THEIR cash and we might be more serious about tightening our belts…and that includes Brazen Bronwyn.

    2 REPLY
    • Pamela I’m inferring the ‘golden handshake’ for life all our pollies receive after their second term of office. It’s not superannuation, it’s a disgrace.

  9. if you look at the overall debt which is government + private we are staring down an interest bill each month of around 4 billion dollars and with the fall of the australian peso this must be getting worse as it is all borrowed money from overseas—–learn by Greece just don’t ignore the lesson !!!!

  10. Don’t be fooled the Greeks got done over by a group of greedy bankers who are trying the same thing in several countries including Australia.

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