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. Mike

    So CNN is working in ads for Warner Bros movies into their news stories now? Classy!

    September 19, 2011 at 6:31 pm | Report abuse |
  2. joe

    Contagian wasn't that good, it was ok that's all. But the whole epidemic thing has been way overdone now. Hollywood take note-no more epidemic movies.

    September 19, 2011 at 6:32 pm | Report abuse |
  3. joe

    Huh, Obama signed cash for clunkers and TARP2.

    September 19, 2011 at 6:42 pm | Report abuse |
  4. Treadston

    Nice ad.

    September 19, 2011 at 6:45 pm | Report abuse |
  5. karma sutra

    Who gives a fck over Greece ? A puny nation of 10 Mil having that much sway over the world economy ?
    The wall st. crooks are upto no good again, hyping a non issue to generate volatility so they can scam the market once again.

    September 19, 2011 at 6:47 pm | Report abuse |
    • The Oracle

      Right on!

      September 19, 2011 at 7:44 pm | Report abuse |
  6. sdjim

    First thank you banasy, you get it! Next Archie de Bunker. I'm baffled as to where you get your "facts and statistics from". Are you one of the top 5% whose income went up exponentially thanks to the Bush's deregulation and tax cuts? Or did your income go stagnant and lose 'real value' like the other 95%? Did you ever wonder why everything is stacked against you? Obama' stimulus put construction workers back to work building infrastructure. Please don't blame Obama for the TARP bailout, this was W.'s solution when it was necessary to bailout a deregulated financial industry. Because they were deregulated, subprime loans were hatched on Wall Street. Additionally, when has any President run 2 wars off the budget and then give away 2 tax breaks to the wealthiest. Convince me that if the very wealthiest are taxed to the same percentage that job creation will stop. I've been hearing that load of crap since Reagonomics. (Incidentally, the '80's was tied for the least economic activity of the 20th century. Care to guess which decade it tied with?) This depession is not only a jobs problem, it is a consumption problem, too. Got a couple books to read to bring the economy into focus. AFTERSHOCK by Robert Reich (recognized as one of top 10 cabinet members of 20th century). DEADLY SPIN by Norman Cromwell (former public relations executive with BIG health insurance companies. Actually coined phrase "death panels" that got narrow minded individuals to shout down representatives and senators when they tried to explain The Affordable Care Act (Obamacare, another coined derogatory phrase). ALL THE DEVILS ARE HERE by Bethany McLEAN (also wrote THE SMARTEST GUYS IN THE ROOM about the orchestrated growth and collapse of Enron) and Joe Nocera. Enjoy and learn!

    September 19, 2011 at 7:01 pm | Report abuse |
  7. wayne

    And Obama the socialist has caught the fever bad.

    September 19, 2011 at 7:07 pm | Report abuse |
    • Uncle Bill

      Socialist Governments are Bailing out crumbled capitalist, deregulated and out of control markets. We are in this mess thanks to your republican friends, and no one can argue with that.

      September 19, 2011 at 9:12 pm | Report abuse |
  8. Nunya

    you know....i hate greeks they are smug but i feel like i havent been to the movies in while...headline should have read greece 'clear and present danger'.......nice plug

    September 19, 2011 at 7:32 pm | Report abuse |
    • Dimos

      You dotn hate the Geeks...you hate your own misreable life and a sense of not being happy with your life. But since you cannot hate yourself for your misery, it is not uncommon – according to psychology to 'project'. In other words to take our baggage of misery and transform it into anger or hatred on someone else because we cannot bear it in our lives. So, do yourself a favor go fix your misery. In fact many of your do it here regarding Greece because you cannot bare look face to face at the misery of your own countries' finances.

      September 20, 2011 at 5:03 am | Report abuse |
  9. Andrew

    The greatest concern in this article is what is going on with that fingernail in the photo..

    September 19, 2011 at 7:46 pm | Report abuse |
    • The Oracle

      Good one! Looks like a gram of blow is hiding under that thing.

      September 19, 2011 at 7:51 pm | Report abuse |
  10. fenster

    Apparently the phrase "false construct" (as in the Euro) never meant anything to those leading the EU. Apparently the false notion of one currency where everyone could sit around the campfire and sing "kumbayah" was just too much too resist. Never mind that getting sixteen disparate governments to fall in line with their budgets and economies was too much to expect and ultimately turned out to be true. The real cause of this catastrophe in the making was the dogged insistence of the larger economies (read France and Germany) that all members of the EU join in the Euro, making everyone just as eligible to get poor as they were to get rich. Greece is only the beginning; Portugal, Spain, Ireland and Italy wait in the wings. The only reasonable course is to let Greece out of the currency, declare default and then restructure. Same for the other problem economies. Let the Euro die. Go back to separate currencies, let the problem countries figure it out on their own.

    September 19, 2011 at 7:46 pm | Report abuse |
  11. The Oracle

    The best part is when global power grid fails due to massive solar flare. Back to square one.

    September 19, 2011 at 7:49 pm | Report abuse |
  12. Ryan

    "Has this contagion shown us there needs to be a dramatic change of structure across Europe, including restructuring the EU itself?"

    No. All it's shown us is that governments shouldn't spend more money than they have in thinly veiled attempts to bribe their subjects into submission with unnecessary, inefficient, and ineffectual social programs. It's as simple as that.

    September 19, 2011 at 8:11 pm | Report abuse |
  13. Sumiko

    I want to know how or what the citizen of Greece want or choose the solution if there is no any helps given by out side. It seems like only out siders are doing lots of operation or giving effots. I think "Fund Injection" is not a cure. Even money funding may be bad as spoiling people in Greece. No own rehabilitation, operation is the only sustaining wrong habit.
    If we know people in Greece does not have any effortness to solve their problem, giving any help is just worthless.

    September 19, 2011 at 8:39 pm | Report abuse |
  14. Lawl

    ugh worst product placement article evar

    September 19, 2011 at 8:48 pm | Report abuse |
  15. Mmmmm

    I think if she'd put two dots : and ) on that nail I could have identified better with the point her finger was making...

    September 19, 2011 at 9:06 pm | Report abuse |
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