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. RUFFNUTT ( Somalian pirate & fisherman )

    why dont the people in greese work more and stop spending so much money?

    September 19, 2011 at 2:13 pm | Report abuse |
    • joe08

      because that would be to simple of an answer and take away from so many who enjoy a comfortable life style.

      September 19, 2011 at 2:35 pm | Report abuse |
    • Moron_land

      this is what happens when you dont legalize pod or you dont have MEX close to the US to provide us with endless amounts of drugs, yay for our economy.

      September 19, 2011 at 3:14 pm | Report abuse |
    • noway

      They is no debt. The money you are using is fake. its paper coupons not real money like gold or silver.

      September 19, 2011 at 3:30 pm | Report abuse |
  2. Jeff Frank ( R - Ohio )

    The mental health community maintains 1 in 3 people in our country have mental health issues. That accounts for the high amount of alarmists in the CNN blogger community.

    September 19, 2011 at 2:55 pm | Report abuse |
  3. Brandon

    Greece will fall, and so will the European Union.

    September 19, 2011 at 2:58 pm | Report abuse |
  4. Dave

    CNN keeps dodging the real story.....how Europe got in this mess in the first place?
    Spending to much on infrastructure (is all that high speed rail spurring growth?)
    Spending to much on govt programs (national healthcare, national pension, free day care, etc. you name it)
    Taxing the daylights out of it's populace's...

    All of the things that represent the direction many in washington, AND the white house want to take us

    Do that story CNN!

    September 19, 2011 at 3:01 pm | Report abuse |
    • truefax

      The real deal is that a nation thrives on exports. It's only through making things that others want can a country/tribe/person succeed. The service and financial industries are farces, that don't add value to the economy and only move money around or out of a country.
      We need to make things again… like Germany and China. Having growth driven by legalized gambling (stock/bond markets) is counterproductive and stupid.

      September 19, 2011 at 3:12 pm | Report abuse |
    • Rob

      The US has almost none of the things you mentioned killed Greece yet we are on the same slide. I wonder why that is?

      September 19, 2011 at 4:20 pm | Report abuse |
  5. me

    Yes, please dumb it down to a movie plot, so that I can understand this very very difficult problem.

    Thank you so much CNN for explaining it to me.

    September 19, 2011 at 3:05 pm | Report abuse |
    • nick

      umadbro?

      September 19, 2011 at 3:10 pm | Report abuse |
  6. Loss4words

    Greece has been a flat-spin for several years with escalating debt and shrinking revenues, and America seems to be on a fast-track to the same destination. Liquidation of all state assets, freeze all spending, relinquish control (political and monetary) to the smaller city-states and provincial leadership and eliminate the head of the boil completely. Greece is a specter of things to come and is pointing at us and to our future like a character from Dickens "A Christmas Carol".

    September 19, 2011 at 3:05 pm | Report abuse |
  7. Me3

    Let's not forget what got us in this mess: 1) Bush's two unfunded wars; 2) Bush irresponsible tax cuts; 3) no bank regulation under Bush; 4) Wall Street greed. And no one went to jail.

    September 19, 2011 at 3:10 pm | Report abuse |
  8. bailoutsos

    Greece don't need cash, just borrow like America does.

    September 19, 2011 at 3:12 pm | Report abuse |
  9. serena

    The central banks are independent for profit and make a deal with the governments to print their money and lend it back to them (us) at interest. They have been giving us rate hikes for years, it is time to tell them to take a hike. Long live Greece.

    September 19, 2011 at 3:22 pm | Report abuse |
  10. andy

    most of eu has less debt than US. Whatever debt problem EU has its bigger in US. Greece is not EU its more like US what comes to debt

    September 19, 2011 at 3:25 pm | Report abuse |
  11. New World order is already here

    All of this is being manipulated.
    Its a financial game, and those pulling the strings
    in the end, always end up winners.

    I have said this before,
    how wonderful to be so rich and powerful that you can play RISK with real armies
    and MONOPOLY with real money.
    Civilization is a toy to be played with, but they win
    and you lose.

    September 19, 2011 at 3:31 pm | Report abuse |
    • Mark in Tampa, FL

      TRUTH!!!

      September 19, 2011 at 5:41 pm | Report abuse |
  12. me

    Great job CNN, finding a way to plug the movie Contagion under the guise of a news story. I'm sure it's just coincidence that Contagion is produced by Warner-Brothers, which like CNN is owned by Time Warner. Beware the Infotaiment Industrial Complex.

    September 19, 2011 at 3:31 pm | Report abuse |
  13. Hansson

    If you needs to be informed you should listen to what MEP Nigel Farage says about the problems (on Youtube). Mr Farage is educated as predicted the problems about 5 years ago. EU Ministers sits ashamed when they hear his accurate predictions materialize one after another...

    September 19, 2011 at 3:31 pm | Report abuse |
  14. alanseago

    To Me3: It's not so simple. First, Al Quaida attacked the U.S. and killed thousands of Americans. That organization was based in Afghanistan and supported by the Taliban government of that country. It is unfair and unreasonable to call the U.S. response "Bush's war", any more than it would be to call World War II "Roosevelt's war". In each case the U.S. was attacked and the President authorized a response. I admit, however, your argument is stronger regarding the war in Iraq. Second, Congress passed the tax cuts. Yes, President Bush supported them, but it was a Congressional action - as all tax cuts and tax raises always are. And, if the 2001 and 2003 tax cuts were so bad, it is ironic that a Democrat President has signed their extension. And although Mr. Obama was unenthusiastic about extending the tax cuts for the highest income Americans, he was fully in agreement with extending the cuts for wage-earners making less than $250,000 per year - which is pretty darned wealthy in my book. Third, you cite Wall Street greed, but how about the greed of ordinary people who bought houses they knew they couldn't possibly afford, often with "liars' loans"?

    September 19, 2011 at 3:32 pm | Report abuse |
  15. eddie2010

    Greece Greece Greece – keep looking at Greece so that you don't focus on America. Housing index today: 14. 50 is the middle. Jobs report last week? Dismal, again. Inflation? Headed up. The Fed? Keeping its head in the sand like the proverbial ostrich, while it prints more money. The politicians on the US dollar? "Oh we can always print more". Why in the world would I want dollars after a statement like that? Yeah but it's Greece, guys.

    September 19, 2011 at 3:32 pm | Report abuse |
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