A Greek tragedy: How the debt crisis spread like a virus in 'Contagion'
Experts are worried about whether the Greek economy may flatline.
September 19th, 2011
02:08 PM ET

A Greek tragedy: How the debt crisis spread like a virus in 'Contagion'

A look at the plot of the No. 1 film at the box office, “Contagion,” shows a striking thematic resemblance to the debt crisis in Greece.

“’Contagion’ follows the rapid progression of a virus that kills within days. As the epidemic grows, the worldwide medical community races to find a cure and control the panic that spreads faster than the virus itself.” That’s what the film’s website says.

So how exactly does that relate to Greece, you ask?

In a theoretical movie that followed the "Contagion" effect in Greece, the plot would follow the rapid progression of debt that is crippling economies. As the debt drives up interest rates and sends financial markets plunging, the worldwide political and financial communities race to find the public money to stabilize markets and control the financial panic that spreads faster than the debt itself.

More than a year ago, Michael Shuman, writing on Time.com, told how this script played out in the Asian financial crisis of 1997, and how Greece might be the latest sequel.

That is in part because the crisis in Europe has turned into an epidemic of sorts as it spreads from country to country. It's left the European Union struggling and the eurozone's financial health hanging in the balance, and it threatens prospects for a U.S. recovery if the global economy is in shambles. Which is part of the reason that U.S. Treasury Secretary Timothy Geithner huddled with European finance ministers in search of a way out of the debt crisis.

And it's not just a financial crisis that's spreading. It's the fear too.  In the same way that riots in England have been blamed on economic hardships, reports out of Greece show the once carefree residents are getting "more depressed by the day" with depression and suicide rates growing.

Can an answer be found in time?

"Time is running out."

That simple statement encapsulates a sense of urgency and fear regarding the Greek debt crisis and the larger implications for Europe's economy as well as the global economy.

It came from Marc Chandler, the global head of currency strategy for Brown Brothers Harriman, after meetings between European finance ministers "ended without substantial progress" this weekend.

For months now there have been talks about how to bail out Greece specifically, as well as how to deal with the crisis spreading to core members of the European Union.

The big question is, will time run out before the international community can find an answer? The big fear is that it will.

The Europe default risk signal is flashing bright red. It's the equivalent of the Centers for Disease Control signaling a disease is spreading and needs to be contained quickly.

A lot of countries are in trouble, but Greece leads the way. Experts say the probability that Greece will default on its $345 billion in debt is just about 100%.

What's being done to avoid a global economic crisis?

Greece was given a second bailout on July 21, amid concerns that Greece's default would spiral into a financial crisis within the eurozone. The plan was to restructure Greece's crippling debt.

The plan was dubbed Greece Bailout version 2.0. But can it work?

"There is no solution to the Euroland's sovereign debt crisis in sight," Carl Weinberg, an economist at High Frequency Economics, told CNNMoney.com. "Markets will continue to be fundamentally unstable and volatile as long as we can think."

The European Union recently touted a new aid package, which officials said will cover all of Greece's financing needs.

Tu Packard, a senior economist at Moody's Analytics, told CNNMoney.com that the plans should go a long way toward making Greece's debt burden sustainable and contain the threat of debt contagion. "People are interested in a realistic path forward," she said. "And until now, there wasn't clarity."

The news of a new aid package  followed some extensive delays in decisions that many said made the crisis worse.

Douglas McWilliams, founder and chief executive of the Centre for Economic and Business Research, one of Europe's leading economics consultancies, said that if European leaders don't act decisively by restructuring the euro and European debt within a month, the markets will force it on them.

"Failure to act would mean riots, bank collapses and would set back economies for a decade or more," McWilliams wrote in a column for CNN. "For too long, economically illiterate politicians have tried to deal with Europe's economic and financial problems by covering them with ever thicker layers of sticking plaster."

There have also been calls for a bond backed by all 17 countries in the eurozone and those calls have been growing louder as things have gotten worse.

But German Chancellor Angela Merkel believes euro bonds are the "absolutely wrong" way to defuse the crisis.

"Euro bonds are politically unworkable," Michael Hewson, an analyst at CMC Markets in London, told CNNMoney.com. "They would need to be ratified in all 17 eurozone states, and without Merkel's support, that's literally impossible."

So what is possible?

We don't know. It's the worst kind of waiting game, one where we wait and see if Europe's economy flatlines.

What are the implications?

Greece is quite simply running out of money.  The EU is struggling to provide life support to the entire continent while trying to quarantine each individual situation.

The best hope will come on September 29 when the German Parliament will vote on the second Greek bailout and the stability fund overhaul.

If that doesn't work, there is a possibility of a major default, which would likely cause the virus to cross Greek borders.

As the collapse of the Lehman Brothers financial services firm set off the 2008 U.S economic crisis, some say Greece has the potential to set off a similar chain reaction. George Soros, billionaire hedge-fund investor, said the impact has the potential to be a lot worse.

There are concerns that things are so bad, even if Greece is spared, there likely won't be enough left over to help other countries in need of aid.

In keeping with the "Contagion" metaphor, there may only be enough vaccines to save some, but not all economies.

If this is indeed the end game for Greece, as some have speculated, the question then is: How many casualties will there be before a cure for the economic crisis is found?

As for the long-term solution: Consider how the CDC would have to work with the World Health Organization to stop an epidemic and whether that is the right structure.

The same idea applies to the debt crisis. Has this contagion shown us there needs to be a dramatic change of structure across Europe, including restructuring the EU itself?

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Filed under: Economy • Greece
soundoff (102 Responses)
  1. banasy©

    Lmao, Mmmmmm!

    September 19, 2011 at 9:13 pm | Report abuse |
  2. banasy©

    @Virginia:
    Name calling to bolster one's argument just rather reinforces the fact that you don't have a valid argument if the first place.

    September 19, 2011 at 9:19 pm | Report abuse |
  3. Rob Haz

    lady pointing finger in picture needs a manicure

    September 19, 2011 at 9:25 pm | Report abuse |
    • Rauber

      Some people seems dont read. And the nails of the Greeks? which seems relevant here! If you have nothing to write or to do, dont write, please. Tipical american middle class mind. Im shamed.

      September 20, 2011 at 5:10 pm | Report abuse |
  4. EngineerScott

    The FED GIVES ANY MONEY TO THE EU ,THE USA WILL NOT GET ANOTHER DIME NICKEL OR PENNY IN TAXES

    EVER ,ILL GO TO JAIL BEFORE I PAY ANY MORE TAXES .I might be the poorest person in the USA but I know when

    people are getting the shaft,it STOPS NOW.At least in jail Ill get food to eat and cable and my medical.

    September 19, 2011 at 9:46 pm | Report abuse |
  5. AZLib

    Greece is a prime example what happens when the rich don't pay their fair share. The rich found a haven in Greece a long time ago.. cheeper to pay off a politician they pay a fair share. To trump the deck the middle class and poor enjoyed a nice lifestyle with many working for the government and unions. The drying up the bubble hit the government hard that was counting on the building to continue driving false revenue. Now with this revenue gone the rich are already packing their bags and looking for the next safe haven to soak up the sun and provide nothing to society except looking down their nose. The middle class are scrambling to pick up the pieces and that means of course social systems are hit hurting typically the poor, aged and sick. Sound familure.... If wealth is NOT distributed fairly through taxes or unions whereas the middle class remain a middle class then you will start to see Arab Springs in developed countries... revolution "French" Style will become the creedo. The rich and powerful in America got a bail out in the last days of W including super bonuses for creating this while mess... Middle america has never forgot that little fact...

    September 19, 2011 at 9:51 pm | Report abuse |
    • adeola

      Greece is going to default, it is only a matter of when because in all honesty, all member states have to be saved. economic importance in the long-term would be key in deciding who gets booted out.

      September 20, 2011 at 9:08 am | Report abuse |
  6. Brice A. Cook

    We will be just fine keep putting money into your 401 K's buy stocks and stoke bonds. Do not play into the hype.

    September 19, 2011 at 10:03 pm | Report abuse |
  7. s kel

    E Scott ill buy you a jar of vasoline, get ready.

    September 19, 2011 at 10:26 pm | Report abuse |
  8. Manoj Tewari

    The punch line of the entire article is shown below and September 29th is the D day....

    The big question is, will time run out before the international community can find an answer? The big fear is that it will.

    The Europe default risk signal is flashing bright red. It's the equivalent of the Centers for Disease Control signaling a disease is spreading and needs to be contained – quickly.

    A lot of countries are in trouble, but Greece leads the way. Experts say the probability that Greece will default on its $345 billion in debt is just about 100%.

    September 19, 2011 at 10:32 pm | Report abuse |
  9. Mike

    Wait, Greece's debt crisis is over $345 billion ?? That's like a rounding error in the US budget.

    September 19, 2011 at 10:34 pm | Report abuse |
  10. Simon

    As a German taz payer I am fed up of these tip pot EU countries like Greece thinking German s a cash cow. All they keep doing is coming back and asking for more. Kick them out of the Euro zone.

    September 20, 2011 at 2:19 am | Report abuse |
    • Dimos

      @Simon...Don't play it "victim" mister. Yes, Greece had relatively bad finances like MOST eurozone countries do. Do your research, mister almost all Eurozone countries, Germany included have a deficit over the 3% ceiling. Oops…you are not singing now. Are you? It was our idiot PM that came out publicly and announced that he found 'chaos' in order to ridicule his predecessor whom he hated. Instead, he attracted the markets and the rating agencies that until that time would never bother Greece and would give an A rating. So, NO GREEK WAS ASKING FOR ANY MONEY FROM ANY GERMAN WHATSOEVER UNTIL THAT TIME BUt then, Germany's freaky supposedly 'indignant' reaction and massive hysteria of its Press unseen anywhere in Europe made things worse for Greece because your big-mouthed politicians started lamenting and attracting even more negative attention on Greece WHICH I REPEAT WAS DOING FINE UNTIL THEN WAS N-O-T ASKING FOR ANY MONEY until you made the situation bad. Germany did it on purpose. And the Germans arent very smart people or pretend not to be smart because they want to portray the profile of being a 'victim'. Why am I saying that? Because Germany DOES NOT give Greece money as gift. It L-E-N-D-S Greece…Get over it, dude. Germany borrows from the market with interest of 1,5% and lends Greece with 3,5 or more. So, this 2% it is Germany that gains FROM GREECE. FROM THE GREEK TAXPAYER. This is why they made the situation worse…BECAUSE THEY WANTED TO MAKE MONEY OUT OF IT!!

      September 20, 2011 at 5:26 am | Report abuse |
    • Dimos

      Meanwhile no German seems to be singing of the fact that in the boom years (Greece had been booming for 16 years in a raw) we were buying on an annual basis German products as imports (mainly luxury cars) while the value of German exports to Greece were around 6-7 billion euros annually during those booming years. Do your math, mister and see how much Greece and other southern countries have paid BECAUSE OF THE CHEAP EURO INTERESTS RATES FOR THE GERMAN REUNIFICATION and stop screaming and pretend to be 'angry'. If you take the lower amount of German exports to Greece, some 5 billion and multiply by 15 or 16, you get a huge figure that corresponds to the amount spent on the German reunification. Without other Eurozone countries like Greece, Spain, Portugal to buy your products cheaply and without an export boom to our countries, East Germany today would still be like Moldova. And NEVER EVER FORGET: you are NOT "giving us" money. You LEND US and you EARN from the interest rate difference. In the last two years Germany has earned 600 million euros on interest by the Greek taxpayer. Now though that the Germany exacerbated Greek crisis is spreading the German are trying to fix what they cant fix any more when only a year ago they were dragging their feet.

      September 20, 2011 at 5:28 am | Report abuse |
  11. Max

    This crisis started in the United States CNN. Perhaps you can remember Reality instead of making up stories. On top of this it is the US ratings agencies that have made everything much worse in Europe. On top of this it was these US Banks that helped Greece hide it`s debt with all these strange financial constructions. When is anyone going to jail for this.

    September 20, 2011 at 10:36 am | Report abuse |
  12. lisalin

    英文1

    September 21, 2011 at 2:55 am | Report abuse |
  13. seppe

    test, please do not reply.

    September 21, 2011 at 6:39 pm | Report abuse |
  14. schickendantz

    GREECE BANCRUPT? Why don’t see it this way? [Found on a forum. Interesting.]

    All of us in this world worked and had a living until recently. Suddenly the money is gone. Where has it gone? Well, we, the people, make money by contributing something to society. That makes the real money circuit. Others make money with money, they don’t contribute anything to our society but only suck real money out of your purse. Money is not a commodity but is to make barter easier. When we put 100 dollars of our real money into a bank, the bank is allowed to lend the real-money makers [us, workers] ten times the amount you put in or 1000 dollars. You think it is money but it is credit only, it has no value at all. Immediately they start cashing in, say 7% real money for it from you, or 70 dollars a year while you get 2% for your 100 dollars in their bank that make
    their business possible, so you get 2 dollars. Thus they make 35 times more than you do and on money that does not even exist. With their profit [interest], being your real money from labor, they buy up the world and return your real money to your real money circuit to start the game all over again. That way they become richer and richer with fake money without contributing anything to society. They eventually finance wars to keep their business going. When they overdo this, people are going short on their real money from labor and that is what causes the trouble in Greece. But don’t bother. They are not the only ones. This is happening all over the world now so stay put. Always realize that there are two money circuits: a real one and a fake one which is 10 times or more bigger and which is what the rich live on and keep us in line. Oh, there is a third circuit within the real money circuit from work: the black money circuit. But that is real money without paying tax for our society. In some countries it is 40% or more. Eliminate it and the country goes bankrupt. Is everything clear now? To stop them from draining you, put as little money in the bank as is necessary for barter and don’t borrow fake money.
    Anonymous

    February 22, 2012 at 3:59 pm | Report abuse |
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