It’s not hard to make the connection to us in the States. Our overall debt to GDP ratio has greatly increased over the past ten years, and our politicians are throwing around the same language, “earmarks” and “corruption” that has swirled around the Greek government’s inability to maintain its country’s credit rating. (yes, nations get credit ratings too, though in the case of a country it is more of an analysis of its current debt situation)
A national debt crisis affects all areas of the economy, but the damage is felt especially heavy in sectors that depend on investment to keep going-such as the real estate market. Interest rates skyrocket as faith in the nation’s creditworthiness shrinks, with disastrous effects for real estate all over the world.
There are differences, naturally. The Greek public debt-to-GDP ratio is currently over 120%–the US’s is around 80%, alongside perfectly solvent countries such as the UK. Greece has long been seen as a problem country by experts. In addition, direct spillover in terms of dollars and cents is unlikely since the amount of total debt is fairly low and US banks do not hold very much of it. The big danger is panic-as we’ve already seen with the Lehman Brothers, jittery investors can sometimes be self-fulfilling prophets.
State governments such as Texas, and local governments such as Dallas typically maintain low levels of debt, which can counter attempts to bring a country out of a recession but at the same time act as a check on overspending. Perhaps now we will see the advantages of such a system.
>By Ashlee Pannell: A Dallas Real Estate Broker, With Nu Home Source Realty a Denton Real Estate Company. We are Home of the 20% Commission rebate to most of our buyers. Ask about our bucks for buyers program.
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