I can't remember where I saw that but I read the following earlier:
Let's pretend I have a dog and you have a dog. I sell you my dog for a billion pounds and agree to buy your dog for a billion pounds, but we don't want to swap dogs, so we also agree to rent the other person's dog for a hundred million a year.
We are both in the same actual position before and after the transactions, but we have assets worth a billion and revenues of a hundred million a year, which is enough to make people want to lend us more money.
Swap dogs for crap mortgages or government debt and that's pretty much the situation in Europe and the US in 2007.
As for what Greece has done with the money (which is equivalent to nearly USD300k per person of working age in Greece) and you have 30+ years of a massive state enterprise, a very generous welfare state, inefficient tax collection from a badly designed system and huge tax evasion issues.
As the final layer of icing, the declining competitiveness Greece was experiencing towards the end of the 1900s was an issue when they had their own currency (which devalued hugely from GBP1:GRD250 in Jan '90 to GBP1:GRD320 in Jan '93 to GBP1:GRD530 in Dec '99 - that's a 50% drop) became critical when they joined the Euro and could no longer devalue to improve their export demands.
As an aside, anything the Greek government borrowed in a foreign currency would have interest and principal needing to be repaid in a foreign currency, and that foreign currency was twice as expensive at the end of 1999 as it was at the start of 1990.
BTW, if your daughter still wants to know more details, Neil, she is probably as nerdy as I am
and will enjoy spending an hour or two nosing around the
OECD's tables.
