But the desire of the savers to continue to save (ie have surpluses) at a time when the borrowers/spenders are retrenching is becoming a problem. To the point: if this becomes a race to who becomes the most virtuous, everybody loses in the process.
More to the point: given that borrowers are governments now, the money from German savers would be more usefully employed, from the Germans' point of view, on German or European infrastructure than on US wars. In the long run, we're all dead. John Maynard Keynes
The time to reorganize the country was a few years ago when the signs of trouble hit.
But when Greece was growing at an average rate of 5%, no one stopped to think about paying down the debt. Then the mother of all recessions comes along, and you're screwed.
In other words, Greece might have been better able to solve this on its own even given the cheap debt had the recession been an average type recession.
So, when cheap debt comes again--if ever--can we automatically assume that it will lead to a bubble? Even the US housing market which is the initial source of the calamity is much smaller than the true losses incurred by the banks. The bubble would have been much smaller had the banks established better practices, or at least better understood the risks they were undertaking. On one side, we have cheap debt, and on the other side we have stupidity. Cheap debt without stupidity causes a bubble, but not a bubble of this magnitude. You need stupidity to bring us to the point we are at now.
