European Crisis: Simplified

We have all been hearing of European crisis; news channels across the globe and all print media of the word have been covering the developments continuously on a quotidian basis. Economists and the who-s-who of the world have been making their reservations and suggesting methodologies to tide over the scene. Thinkers who had paeans been written when the formation of European bloc took place are no hiding for cover. Amongst all the chaos that is going on, none (read close to few) have bothered to provide a layman’s dissection of the problem and list out the learnings’ for future of mankind based on the events that have unfolded. This editorial we attach the crisis in a not-so-sophisticated manner.

Cut your coat according to your cloth: The glaring ratio which was most followed was the disgustingly high debt / GDP ratio. For Greece it was as high as 144% in 2010 (it has been more than 100% plus since 2005). Imagine surviving on debt only for many years with little growth in income.  Managing debt is an important area which needs soul searching whether it for oneself or for the company we work for or the nation we live in.

Do not place all your eggs in the same basket: Greece as a country has no set of industries other than tourism. Being an island nation, they could have developed an expertise in manufacturing ships or they could have built a robust agricultural model as has been done by Israel (a country with the problem of limited land as Greece) or something else. Concentration on only one area (read no diversification) is also another area of concern. The same thing applies to all readers with regards to their individual investments and future planning’s.

Sar utha ke jiyo: Besides the global ratios and figures, one thing which missed the sidelines is the rampant evasion of taxes and fudging of figures. Some behemoth consultants of the country had been paid millions to keep figures under wrap. What is the fun in hiding figures when all would be re-discovered after some time?  

History repeats itself, therefore lets’ learn from history: We stopped learning from many such similar episodes which had happened in the past. The most glaring and recent one was that which happened in Argentina in 1990; increased external borrowing, flight of dollars from the country and swelling public debt. Probably that was the exact scenario in which Greece caught itself!

Lets practically do some bit of soul searching and if we do everything the Indian way as has been practiced by our previous generation, the country would be long devoid of such crisises and problems.