HONOLULU (HawaiiNewsNow) - It's time for Howard's Illustrated Economics.
Today, the Greek debt crisis!
Remember six or seven years ago? Banks were lending money to home buyers who couldn't meet the payments. Well the same thing on a larger scale happened in Greece, which was tapping cash on global credit markets to finance deficit spending.
Then the bubble burst and the markets crashed and at about the same time someone figured out that Greece had been misrepresenting how much debt it had. That was the beginning of the debt crisis.
Letting Greece descend into chaos didn't seem to be an option, but creditors wanted *something*, so they kept renegotiating with terms that would mean real pain for the Greek people. And all along the terms offered to Greece assumed Greece could run a budget surplus for more than a decade, which no other industrialized nation has done in living memory.
Which brings us to today, when the big news is that Greek officials, who are different officials from the ones who caused mess at their end, have decided to let a repayment deadline slide and have Greek voters decide whether to accept creditors' terms. And the creditors, who thought there was nothing wrong with imposing years of pain on the Greeks, are shocked - SHOCKED! - that officials would ask the Greek people if that was okay.
But that's actually pretty smart. Because the decision has led to banks closing, limits on ATM withdrawals - and the people who will be voting as getting a little taste of what may lie ahead.