The Human Cost of Greece's Debt Crisis

Article: Wall Street Journal, Greek Crisis Exacts Cruelest Toll, by Marcus Walker

This front page article in today's WSJ tells the tragic story of Vaggelis Petrakis, a hard-working family man from Crete who had a company that supplied vegetables to hotels and supermarkets. He was brought low by a “credit economy”, namely clients who paid him with 6-month postdated checks. I won’t paraphrase the story; you’re better off clicking on the link and reading the original.

The article quotes Constantine Michalos, president of the Athens Chamber of Commerce and Industry, who says that the practice of paying with post-dated checks exploded in Greece in the 1990's. "This was a para-banking system of enormous size. It is one of the main reasons for the crisis."

(There was also an interview with Michalos on CNBC today, where he says that about 80,000 small business have gone under in Greece over the last year)

Walker's article notes that the suicide rate in Greece has roughly doubled since the beginning of the crisis.

This morning on CNBC, I saw an interview with Mark Grant, Managing Director of Southwest Securities, who said that total Greek debt, including sovereign, corporate and municipal debt is around $1.1 trillion, roughly 3.5 times their annual GDP -- much larger than the sovereign debt alone, which was reported as $454 billion at the end of 2010 (143% of GDP).

Notwithstanding the outcome of the European debt crisis, it looks like Greece is in for a hell of a de-leveraging, which will weight down their economy for years to come.