Homelessness, unemployment remain as Greece again narrowly avoids default

The Takeaway

Greece has once again narrowly avoided defaulting on its $172 billion debt by agreeing to more austerity measures and other concessions to eurozone countries.

It’s unlikely, however, that this development will ease the dire situation of Greece’s population: nearly 20,000 Greeks are homeless and 21 percent are unemployed. Thousands have taken to the street in protest over these latest concessions, which many Greeks say amount to the country handing over its sovereignty.

In the United States, there continue to be small signs of recovery. On Tuesday, the Dow Jones Industrial Average hit 13,000 for the first time since 2008. But if the last four years have proven nothing else, it’s that what happens across the globe — like in Greece — can directly impact the markets here.

Joe Nocera, an op-ed columnist for The New York Times, said a ratings downgrade of Greece recently is probably right. The country remains perilously close to defaulting on its debts.

The most recent bailout, Nocera said, does two things that make Greece’s economic future particularly dicey.

“It imposes yet more austerity measures on Greece that the populace is … ultimately not going to stand for,” he said. “And second, it makes a series of very rosy assumptions that are required to make the mental leap that this bailout will be the last.”

Unfortunately, Nocera said, that means we’ll be back looking at round three soon.

“This is Band-Aid. That’s what it is,” he said.

As for austerity, something the Germans have insisted on, it makes it harder for the economy to grow, Nocera said.

“If you cannot grow, you will never be able to repay this debt,” Nocera said. “That is the dilemma that not only Greece faces, but the entire eurozone.”

They also present the possibility that the people of Greece will decide they’ve had enough, throw out the government and abandon the euro and its debt.

“They have two weeks or three weeks to legislate all these reforms — everything from privatizing certain businesses to firing inefficient tax collectors to really changing the way the country runs financially,” Nocera said. “This is being imposed by other countries and Greece is going to feel that its sovereignty is being taken away.”

And there’s a large possibility, he said, that Greeks are going to stand up and say no to those reforms. Once that happens, default and departing from the eurozone become inevitable, Nocera said.

“Then the larger question is can the eurozone survive,” Nocera said.

And while the bailouts have protected American banks and given them time to try to minimize their exposure to Greek debt, Nocera said we would be hurt by a Greek default.

“There’s no possible way that won’t affect us,” Nocera said. “We’re not immune.”

And while it’s certainly good news that the Dow hit 13,000 on Tuesday, Nocera said the takeaway is that the market is in a time of uncertainty, which leads to volatility.

“Brace yourself,” he said.

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