Greece has been an experiment in social engineering and is fast becoming an experiment in international financial engineering. There is an important difference. Greece originated and controlled the social engineering experiment. They will neither originate nor control the international financial experiment.
Greece no longer controls it’s future.
The same lessons apply to every other country and every person within those countries.
People have an inherent desire to be financially independent. Debt is a tool in achieving that, but it is a narrow tool with a short shelf life. Good debt, like for a business, for education or for assets that reduce other expenses, is tolerable. Bad debt, like for consumption, or assets that are used, like nicer cars and bigger houses, is self-indulgent.
The world is a perfectly fair place. If you spend money you do not have now. In the future you will be required to spend money for the loan payment. You might need that money for something else.
Everyone must assess the value of any debt they incur. Ask if “future self” will be as pleased at the consequences as “present self” is with whatever was acquired with the borrowed money.
Don Shaughnessy is a retired partner in an international public accounting firm and is now with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario.