Greece has been on the minds of many people recently. The world sat on pins and needles waiting for the results of the June 17 election. Thankfully the New Democracy party won, and Greece will remain in the European Union—at least for the time being.

The question I wondered about is how such a small country can seemingly hold the whole world hostage. For the last six months, bad news from Greece has sent the Dow into a tailspin. I sought out East Chop’s own Jeff Traenkle for answers. Jeff was the chief financial officer of a major international consulting firm, and has dealt with such problems during his career.

“Panic, Rick. Lehman Brothers, a medium-sized bank, almost brought down the world financial system three years ago. Markets don’t like uncertainty,” he said. “When the world financial system was healthier, nobody realized the degree of sovereign debt amassed by Greece. That debt has been financed by banks all over the world. Many of these banks have been weakened by the real estate debacle. If Greece defaults on their loans, panic could easily spread to banks in Italy, Spain, and Portugal.

“Germany is in a difficult position. They are the only country in Europe with the resources to bail out Greek banks. The problem is that they have recently spent huge sums of money bailing out East Germany. They are both tired of bailouts, and there are limits to their resources.”

“How long do you think they will continue to do it?”

“That’s a good question. While many in Germany see Greece as a sinking ship, there are Germans on that ship. A bankrupt Greece would adversely impact not only Germany, but the global economy as well.”

“Is Greece bankrupt?” I put that question to Anne and Rick Hazelton, also East Choppers. Anne and Rick have led 10 trips to Greece beginning in 1994. In addition, they have traveled there several times on their own. They think of Greece as a second home.

“Yes, financially,” Rick responded to my question. “But there is so much that is right with the country. The people we deal with work really hard.”

“That’s not what the Germans think,” I replied.

“That’s true. There are important cultural differences between them. The Greeks are Mediterranean. They are more laid-back. It’s also really hot in Greece. People take a siesta at noon, but they work hard in the morning and late into the night.”

“Let me also point out,” Anne interjected, “that the people are friendly, the hotels are clean, the ancient sites are well-maintained, and people are not rioting in the streets.”

“Greece has been bashed in the press. That’s Anne’s point,” Rick added. “The result is that tourism is down. Yes there are problems with corruption in government, people try to avoid paying taxes, and we saw high levels of unemployment when we were there last month. Especially among young people. However, the vast majority of people we spoke with want to remain within the EU. Greece has greatly benefited from their membership in the EU. The issue is the austerity program imposed by the Germans. They want it eased.”

Returning to Jeff for the last word, I asked: “Do you see a hopeful way out of this mess?”

“Don’t ask me for a crystal ball, Rick. The problems in Greece are symptomatic of the new international financial system. World markets are interdependent in complex ways that even the best minds don’t fully understand. It’s hard to fix a problem when it is not fully understood. The whole thing could unravel or the EU could continue to muddle its way toward a solution.”

Let’s hope the latter outcome is the case.