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Commentators on the Greek financial crisis are describing a sense of despair among the citizens as they see debt piling upon debt and one austerity measure after another stretching into an indefinite future. Despair is dangerous. It pushes people to perform acts of irresponsibility bordering on madness. A desperate man has little to lose.

The history of debt will be written one day and, as with most acute situations, it will be seen to have started rather innocently and gradually become increasingly chronic. The initial emergency – or, more probably, simply urgency – will appear as justifying the first small, short term loan.

We all need to borrow at some time in our lives. But the measures of what we owe will quickly change from ‘how big is the debt’ to ‘how much has the debt increased’ – “oh, only 5% last month, that’s better than the 8% the month before”.

How wickedly deceiving those percentages can be.

Getting into debt is like wandering about in an unknown city where you cannot read the street names. At each corner you mean to turn back but there are sights to see, shops to visit, cafes to patronize. And so you go on until suddenly it gets dark and you don’t know where you are or how to find your way home.

The way a country becomes bankrupt is no different from the road to personal insolvency. Each new step is intended to correct the situation. In the event it merely leads us into deeper loss. Of all the lessons I learnt in business, when to turn off the taps was the most important.

So do you bail out or do you support, and make the situation even worse? None of us refuses a dollar to the man on the corner. But every day? And then every hour? Life teaches you that what you give someone one day they will think you owe them the next.

Calm and sensible financial planning is not the mood the Greek citizens are in at present. Let’s hope the lesson that financial prudence is important is being learnt by others before they reach the same parlous destination.

The iceberg of which Greece is the tip is mighty and international.

—o0o—

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