I wrote this elsewhere on July 15th. Thought there might be others who would want to read this. This was my answer to someone who wanted an easy to understand/intuitive explanation about Greece's Debt crisis. Here is an oversimplified, easy to understand, layman's version of what happened to Greece and what the fuss is all about. This was written for a movie group, hence the movie related analogy.
Assume that Greece is a film producer from Gandhi Nagara in Bengalooru, India.
1.All producers borrow money from financiers(All countries borrow money with the help of Govt. bonds). Greece also did.
2. A producer has to earn more than what he has borrowed with the help of ticket sales(Countries collect Taxes)
3.Now a producer has to spend this borrowed money on a movie. But this dude Greece spent it on stuff like 5 star hotels, resorts, free Switzerland trip to hero etc( Greece gave exorbitant salaries to Govt employees, ridiculously high pensions, spent money on useless infra projects etc. instead of using it to boost the GDP)
4.No theatres give the ticket price back to this Greece guy. All audiences are entering cinemahalls without tickets(Massive Corruption, Nobody pays taxes in Greece, tax evasion is unimaginably high)
5.You can get money for low interest rates if you join nirmapakara sangha(Association of producers) [Joining Euro Zone]
6. To join you must be eligible. You should have produced at least 1 hit and you should possess 2 crore in cash. Greece pushes one film and shows cooked up excel sheets projecting a 2 crore balance( Greece lies to Eurozone about debts,GDP and stuff)
7. Now nobody is ready to lend money to Greece. And interest rates are doubled for him. Sangha(Association) helps him but asks him to cut all the budget and finish film within 1 crore. (Euro zone demands Greece to cut all expenses and increase tax)
8. Greece thinks that making a low budget film will only hurt him. Greece asks a 10 Crore loan so that he can make another big budget film and bounce back(Greece asks for a bailout so that it can get the economy going)
9. A biggie like Rockline Venkatesh (Germany) is angry. He says, "we can’t give another 10 Crore loan so that he can pay the 15 crore loan he already has". Greece argues that only way to repay loan is to make another big film which is possible only if he gets a new loan!! about debts,GDP and stuff)
7. Now nobody is ready to lend money to Greece. And interest rates are doubled for him. Sangha(Association) helps him but asks him to cut all the budget and finish film within 1 crore. (Eurozone demands Greece to cut all expenses and increase tax)
8. Greece thinks that making a low budget film will only hurt him. Greece asks a 10 Crore loan so that he can make another big budget film and bounce back(Greece asks for a bailout so that it can get the economy going)
9. A biggie like Rockline Venkatesh (Germany) is angry. He says, "we can’t give another 10 Crore loan so that he can pay the 15 crore loan he already has". Greece argues that only way to repay loan is to make another big film which is possible only if he gets a new loan!!
Note: This is primarily based on a chapter from the book Boomerang by Michael Lewis. Here is a detailed article by Michael Lewis(it is an excerpt from the same book):
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