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Greece, Spain, Italy: Countries On the Brink of Financial Collapse

Updated on May 8, 2010

Thousands of miles away, in Europe, their is real impending financial crisis on the brink of an abyss. Being Americans, we really don't care nor even know about it. Most think whatever happens there, in Europe, financially, has no direct impact here. Everyday we hear of Greece, the home of democracy, that is basically broke financially. It is hard to grasp what this means, exactly how does a country go broke? what happens then? How would this impact the US?

The last resort lender to these countries in peril of collapse is the IMF, International Monetary Fund. without the IMF, Greece would collapse. Anarchy and riots would occur from the general population (which have started).There is trickle down effect as governments cannot secure loans to pay for services, that cannot pay workers for the services and so on. The countries ability to attract outside business falters, its own monetary rating to get loans etc., is degraded, making it even harder.

The IMF is like a giant worldwide credit union. Members supply funding and the union lends it out. Members  must pay into it. For Greece to get the life saving loan, they must agree to cut salaries and pensions.Greece will abide by the terms, the question is will the general public. same with Spain and Italy, both countries are not that far off behind Greece.

The real kicker for Americans is that the USA is the largest share holder in the IMF, 17%. Thus, the bulk of the money going to Greece is derived from US taxpayers. Japan and Germany is 6%, France and UK, 5%;Saudi Arabia is 3%, China, almost 4%. The US, for its part, loaned Greece $145 billion!!! Germany lended $29 billion. The IMF will loan Greece $250 billion so it can remain a functioning country. If Greece defaults on this loan, the IMF simply absorbs it.

The ripple impact of several European countries collapsing or requiring such money might force the IMF to collapse, as the all countries are having the same deficits, countries that collapse will wreck finanical markets, investments around the world impacting banks which will impact you at some point, whether directly or indirectly, just as the US housing collapse did.

Seriously, watch to see if there is a domino effect with countries in Europe, maybe there is a new world order closer than you think.

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    • Csjun89 profile image

      Csjun89 7 years ago

      I agree with you that the world should watch what happens in Greece carefully, especially with the riots there that makes everything uncertain.

    • loveofnight profile image

      loveofnight 7 years ago from Baltimore, Maryland

      one thing for certain is that it won't end there.......

    • OpinionDuck profile image

      OpinionDuck 7 years ago

      Do we want to wake up during the nightmare or after it is over?

      Athens could be a premonition for us.

      IMF I maginary M oney F arm

      good one..

    • Deerwhisperer profile image

      Brenda Krupnow 7 years ago from Bradenton, Florida

      Well, the way I see it, this disaster should have been foretold and thus avoided, because everyone knows that when you borrow something, it has to be paid back.

    • perrya profile image
      Author

      perrya 7 years ago

      Very true!

    • profile image

      Martha 7 years ago

      maybe you should have mentioned that also Italy is a big share holder in the IMF

    • profile image

      Rohan 7 years ago

      I think Greece must use some good tactic to prevent their economy from collapsing!

    • jaredbangerter profile image

      jaredbangerter 5 years ago from New York City

      This is ridiculously scary. Our own country is definitely on the verge of a collapse as well. The way the whole Federal Reserve works is fraudulent. We're basically paying off a credit card (our loan to china) with another credit card (the federal reserve). Both are charging us HUUUGE interest rates and even if we stopped every dollar in circulation right now, we wouldn't have enough to even nearly break even, due to the large amounts of interest. Everything about the fed is a scam. It's not even federal. It's as federal as Federal Express.

    • way2gogreece profile image

      way2gogreece 5 years ago from Athens, Greece

      Great analysis. The domino effect, that you mention, means that Europe may plunge into deep recession, which means that US exports will diminish, taking the US itself into recession. US recession will have detrimental effects on its ability to repay its own debt (more than 100% of US GDP): hence recession and cashflow crisis will cross the Atlantic. Enter the new world order...

    • profile image

      Austin 4 years ago

      I wonder if the U.S. could pull out of the IMF so it wont affect us as much.

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