Europe, a Parable

Discussion in 'Europe' started by Toro, May 1, 2010.

  1. Toro
    Offline

    Toro Diamond Member

    Joined:
    Sep 29, 2005
    Messages:
    50,764
    Thanks Received:
    11,054
    Trophy Points:
    2,030
    Location:
    The Big Bend via Riderville
    Ratings:
    +25,089
    There are two neighbors who live in a subdivision. One neighbor is Hans, the other is Nikos. They both bought similar houses next to each other at about the same time for the same price. Hans put 20% down to buy his house and borrowed 80%. It has a fixed interest rate and his payment is well within his means. Nikos also has a mortgage, but he put 5% down and borrowed 95% with a variable interest rate. Nikos stretches to meet his mortgage payment every month.

    Hans is an automobile engineer. Nikos is a clerk for the government. Hans is more productive than Nikos and earns more money. Hans works 50 hours a week while Nikos works 35 hours a week and gets every third Friday off. Nikos could work longer, but the weather’s nice so he chooses not to. Hans plans to retire at 67 and is saving for retirement. Nikos plans to retire at 57, but he doesn’t have much savings and is running up his credit cards buying lots of stuff.

    But Nikos is putting too much on his credit card. He can no longer maintain his lifestyle and pay his debts. One day, Nikos skips a mortgage payment. The bank decides to check his credit rating. It has fallen dramatically. The bank then checks Nikos’s income. The bank discovers that Nikos lied about how much money he made on his mortgage application. So the bank calls Nikos and tells him they have to either raise his interest rate or cancel the mortgage. This is a problem for Nikos because he’s maxed out his credit card and can’t borrow from anywhere else.

    So Nikos goes to his neighbor, Hans, and asks him for a loan. Hans, who likes Nikos but disapproves of his free-spending ways, says OK, but on the following conditions

    * Nikos has to get a higher paying job, which would require him to work longer and not take a long weekend every three weeks.
    * Nikos can’t retire at 57. He has to work to 67.
    * Nikos has to start paying down all his other debt.
    * Nikos has to start saving more.

    Nikos says “No way. I like my lifestyle. I’m not giving it up.”

    Hans replies, “Well, I work hard for my money. If you aren’t willing to alter your lifestyle, I’m not lending you anything. Why should I lend you my hard-earned savings if you aren’t willing to change your free-spending ways?”

    “But I deserve to live this way!” Nikos yells.

    “Sorry,” says Hans.

    Nikos goes across the street to Francois. Francois and Nikos have always gotten along pretty well, so Nikos asks for Francois for a loan. Francois is afraid that Nikos may have to sell his home and move. Francois doesn’t want Nikos to move because he is banging Nikos’s hot Greek wife, so he lends him the money.

    And that is the eurozone.
     
  2. editec
    Offline

    editec Mr. Forgot-it-All

    Joined:
    Jun 5, 2008
    Messages:
    41,427
    Thanks Received:
    5,598
    Trophy Points:
    48
    Location:
    Maine
    Ratings:
    +5,617
    Do you really think the story is as simply stated as your parable?

    I mean REALLY?
     
  3. Toro
    Offline

    Toro Diamond Member

    Joined:
    Sep 29, 2005
    Messages:
    50,764
    Thanks Received:
    11,054
    Trophy Points:
    2,030
    Location:
    The Big Bend via Riderville
    Ratings:
    +25,089
    Pretty much.

    Greece works less, is less productive, retires earlier, spends too much, engages in massive tax evasion, corruption is rampant, and now wants to be bailed out by Germany. What else is there?
     
    Last edited: May 1, 2010
  4. boedicca
    Offline

    boedicca Uppity Water Nymph Supporting Member

    Joined:
    Feb 12, 2007
    Messages:
    41,799
    Thanks Received:
    12,774
    Trophy Points:
    2,250
    Location:
    The Land of Funk
    Ratings:
    +22,794
    Good parable.

    Now switch that to the U.S., and give Nikos more pay than Hans, with big pension benefits - and force Hans to pay more in taxes so Nikos can retire early.
     
  5. Thinman
    Offline

    Thinman Active Member

    Joined:
    Sep 3, 2009
    Messages:
    539
    Thanks Received:
    91
    Trophy Points:
    28
    Ratings:
    +91
    Nikos defines the lifestyle of many here in the USA. He has leveraged his credit to the breaking point and now looks for a bailout. If he gets it, he will not have learned anything and will continue his spendthrift ways.
     
  6. Foxfyre
    Offline

    Foxfyre Eternal optimist Gold Supporting Member Supporting Member

    Joined:
    Oct 11, 2007
    Messages:
    47,685
    Thanks Received:
    10,799
    Trophy Points:
    2,070
    Location:
    Desert Southwest USA
    Ratings:
    +14,396
    Greece also decided to shore up its government with a VAT and thus so further damaged its economy that it now is in the worst shape of any nation in Europe or North America. Probably South America too. It is a big component in what crashed the US markets this week and it hasn't helped Europe's any either. Portugal, who did the same thing is right behind them. There is simply no substitute for sensible financial management for Nikos or Greece or the USA.

    [​IMG]
     
  7. L.K.Eder
    Offline

    L.K.Eder unbannable non-troll

    Joined:
    May 29, 2009
    Messages:
    20,327
    Thanks Received:
    3,611
    Trophy Points:
    280
    Location:
    theartching thapphireth
    Ratings:
    +6,810
    you fuckheads leave nikos alone!

    nikos did not start a war of choice to get into debt, you morons.
     
  8. Toro
    Offline

    Toro Diamond Member

    Joined:
    Sep 29, 2005
    Messages:
    50,764
    Thanks Received:
    11,054
    Trophy Points:
    2,030
    Location:
    The Big Bend via Riderville
    Ratings:
    +25,089
    Tax evasion is a national sport in Greece.

    Greek Wealth Is Everywhere but Tax Forms - NYTimes.com
     
  9. Big Black Dog
    Offline

    Big Black Dog Gold Member Supporting Member

    Joined:
    May 20, 2009
    Messages:
    22,914
    Thanks Received:
    5,109
    Trophy Points:
    260
    Ratings:
    +5,719
    Maybe our country could be over run by the Saxons and set us back far enough in history to try this whole thing again but in a smarter, more efficient way.
     
  10. boedicca
    Offline

    boedicca Uppity Water Nymph Supporting Member

    Joined:
    Feb 12, 2007
    Messages:
    41,799
    Thanks Received:
    12,774
    Trophy Points:
    2,250
    Location:
    The Land of Funk
    Ratings:
    +22,794

    Speaking of morons.^^^


    Greece's problem is a bloated government full of entitlement oriented employees who all expect to retire with big pensions in their 50s.
     

Share This Page