I recently read that not so long ago, debtors who were unable to pay their debts were imprisoned until they were able to. This doesn’t make sense really since how can you work and make money to pay when you’re behind bars? Supposedly, we have progressed beyond such medieval practices. But looking at Greece, you can’t help but wonder if we really have progressed much. Greece has a huge debt and is in risk of being unable to pay. So it needs to earn more (taxes), spend less (budget cuts), and borrow more. But lenders would only lend at a higher rate to reflect the increasing risk of default. This makes it harder to pay back the new debt. The European Community has also been providing bailouts in the form of cash and/or debt restructuring. But there are the strings in the form of austerity packages tied to the bailouts. These austerity packages include decrease in salaries/pensions, increase in tax rates, denationalizing companies, and selling government property. And again, these austerity packages, by possibly slowing down economic activity, makes it harder to pay back debt. Caught in this vicious cycle, you’d probably wonder if a prison cell is better.