According to CNBC News, the answer is here: Greek Bailout Deal Closer.
So it looks like we're talking about a $146,000,000,000 bailout (Greek population is around 11,000,000). Who knows what these numbers mean...except to say that they are large.
In return, the government is promising "enormous austerity measures" (tax hikes, wage cuts, etc.).
But why is Greece worth "saving" at all? Well, I love this part. The reporter says "Well just look around...Greece is a huge export market for Germany...just look at all the Mercedes, BMWs, and Audis parked around here!!" (He is in Greece, with the Parthenon in the background as he is saying this).
Now, just hold on there a sec and let's see if I have this right.
German workers bust their butts manufacturing automobiles. Rather than ride them around themselves (an act of consumption), they prudently decide to export all these fancy cars to Greece (an act of saving). Greeks can't manufacture these automobiles themselves (or produce enough olive oil to pay for them) because...well, you know...you can't do this and expect to maintain a decent tan, perhaps. So, the Greeks borrow the cars (an other goods, of course, like suntanning lotion and skimpy German-made thongs perhaps). Greece issues a collective IOU to pay for these things.
But now Greece is having trouble paying back its debt to the Germans. If they default, they won't be able to afford any more German-made automobiles! The German export market will dry up, leaving German auto workers idle!
And to prevent this from happening, the German government stands prepared to tax its citizens to pay for (or at least subsidize) Greek debt, i.e., the German cars it sends to Greece...so that German workers can retain the privilege of working hard and shipping even more cars to Greece? What is this guy thinking (he is not the only one I hear speaking in this way)?
I don't get it. But then again, perhaps this is one reason why I don't get calls from CNBC soliciting my opinion!
Brief Bio: Born in Vancouver, British Columbia. Flowering career in construction sector (drywall taper) aborted by severe recession (1982). Received Ph.D. in Economics from the University of Western Ontario (1994). Taught as a university professor for over 20 years. I now work in the Research Division of the Federal Reserve Bank of St. Louis and I write this blog mainly in my spare time (it is not a part of my formal duties). I welcome comments and (constructive) criticisms. Feel free to email me if you would like to discuss issues in greater detail.
Believe those who are seeking the truth. Doubt those who find it. Andre Gide