It's not just Greece. Portugal, Italy, Ireland and Spain - known with Greece as PIIGS - are also in some danger. All these countries have borrowed a lot during good times, and now it's time to pay that money back. Unfortunately, the economies haven't recovered much from the recession in 2008, and some of them run large deficits - meaning, amounts by which expenses exceed revenues, so they can't pay everything back just yet.
Here's how this works. Governments borrow to meet expenses or for capital expenditure (such as building infrastructure). These loans are either short-term, with less than a year to maturity (sold as treasury-bills), or long-term (bonds). The interest rate paid on these loans is usually veryRead More »from The Problem with Greece