Greece, Something for Nothing, and the Disadvantages of Going into Debt

The Greek situation, as far as the Greeks are concerned, can be characterized quite simply: they want two incompatible things. They want to stay on the Euro, because it means they get great financial advantages from it, and they don’t want the austerity measures to pay for those advantages. They want something for nothing. For the last several years, the other Europeans have been willing to let them have it, though with the idea that they would come to their senses and pay for things eventually (if they were given easier terms on their debt or if some of it were forgiven). However, when a hardline leftist government got elected, it was like having the snotty and greedy new boyfriend of a woman with a rich uncle, who has been generously giving her money every now and then, say to him, “Pay up, jackass! Give her more money now.”

This hasn’t gone over very well. Of course, there are always those of a socialist bent who insist that not giving the Greeks what they want amounts to nothing but “greed” on the part of the rest of Europe, particularly Germany. And then there are the lovers of a united Europe who just can’t bear the idea of just giving up on Greece and casting them loose from the Euro.

But no matter what happens tomorrow in the Greek referendum on the matter, the suffering the ordinary Greeks are going through right now proves what I have been saying for some time: pay off your debts as fast as possible. The Greeks are in debt, and their creditors are making their lives miserable. The same can happen to individuals who are in debt. Those who look just at the finances of a home mortgage insist there is no point in paying ahead on a mortgage because that money could be used to invest in something that has a high rate of return. But my argument is that when one is in debt, one is at a power disadvantage with respect to one’s creditors, and should one get behind, they can make life miserable for you. Naturally, if you are in the top half economically, you don’t really have to worry too much, but those who are in the lower middle class already have less power by virtue of their economic position, and going into debt just adds to that. An unexpected medical bill can mean a missed payment on a loan, and that will bring trouble. So will a bank error for which the debtor bears no blame. The best course, then, is to pay off one’s debts as fast as possible.