Paul Tullis's Grim Tidings

Bitter musings on politics and policy

Greece's debt = 1/2 Google's revenue

with 10 comments

Image representing Google as depicted in Crunc...

Image via CrunchBase

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Stock markets reeled last week—even leaving aside the mysterious 13-minute swing on Thursday which investigators are still trying to figure out—partly on the chance that Greece will be unable to meet its loan payments. Germany came to the rescue yesterday, but we’re not entirely out of the woods.

For all the stress and fear of contagion and plunging markets and blah blah blah, I think it’s worth putting this “crisis” into perspective:

On May 19, Greece will need about $12 billion.

Google’s profit—its PROFIT—in 2009 was $6.5 billion, on revenue of $23.6 billion.

I don’t point this out to say that Google is too big or too profitable. But for heaven’s sake: For half of what Google pulls in in a year, Greece can meet its first big debt payment?

Correct me if I’m wrong, but when two guys in their 30’s can solve a problem by whipping out their checkbooks, it doesn’t strike me as a situation that’s going to cause a global financial meltdown.

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Written by ptullis

May 8, 2010 at 3:45 pm

10 Responses

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  1. haha, yeah, this. I’m long Greek debt. It’s a total different scenario when a sovereignty is rated low, compared to a corporation. Sure the country might default on a few payments, but the recovery rate in these situations is in the 99% range… meaning that they will pay the debt eventually. I mean, seriously, what happens if greece defaults? they’re going to stop the sewer systems and the police department? No, I don’t think so, I think there will be a bail out by the EU.

    Ben Lebovitz

    May 8, 2010 at 4:42 pm

  2. I thought the bigger problem was that Greece is just the tip of the iceberg, and that this isn’t the only payment Greece is going to be short on (along with other countries, municipalities, etc). Iceland, for instance, owes a few billion after its meltdown, and Greece’s population is something like thirty times larger than Iceland’s.

    The scale of the problem is interesting, though. American equities markets lost about $10 trillion in an hour on Thursday.

    Zach Hensel

    May 8, 2010 at 6:08 pm

    • So we’ve been told. But Germany’s bailout package was for less than $30b over 3 YEARS. Tip of the ice bucket is more like it.

      Paul Tullis

      May 8, 2010 at 10:14 pm

  3. …yeah, but Greece’s debt is caused by hyper-socialism….as 1 in 3 Greeks works for the government….meaning they do nothing all day
    for great pay

    andylevinson

    May 9, 2010 at 10:06 am

    • Blaming the workers for a debt problem incurred by the government at the behest of the banks is capitalist propaganda, and a red herring.

      Paul Tullis

      May 9, 2010 at 11:53 am

  4. I think you’re glossing over who Sergey Brin and Larry Page are and what they did. It wasn’t just “two guys in their 30’s”, It was two guys with education and experience supported by a country with an economic climate, resources, and openness to make it happen.

    No-one in Greece could have done what they did here. They’re not nurturing the right stuff. Even if they were, that model is very much yesterday’s news. Google became what they are because they were able to learn from what failed many before them. Remember AltaVista? Lycos?

    Ultimately, the problem there is a burgeoning bureaucracy and corruption that is getting more and more difficult to control. Greece is not unique this way. Many economies even here in the US face similar problems. However, here in the US, there is a significant and growing anti-tax, anti-government movement.

    We expect our government to be efficient, lean, and nimble. And though it will never measure up, there are at least some people in our government who remember where the money comes from.

    So you see, the Tea Party is good for something after all…

    jake brodsky

    May 9, 2010 at 9:36 pm

    • Totally misses the point. And the Internet started as a government program.

      Paul Tullis

      May 10, 2010 at 9:29 am

  5. How come you haven’t been called out on the number analysis?

    Exhibit A:

    http://www.nytimes.com/interactive/2010/05/02/weekinreview/02marsh.html?ref=global

    Exhibit B:

    Markets, unlike writers with the initials PT, are forward looking (I couldn’t resist). The May 19 payment is meaningless.

    ais000

    May 10, 2010 at 12:12 am

    • That is a pretty cool graphic, and those are some pretty big numbers. But all that was true before last week; is that as far forward as markets look? Anyway the relevant numbers are not absolutes but debt as a percentage of GDP. I’ll look into this more later; my two-year-old just woke up.

      Paul Tullis

      May 10, 2010 at 9:58 am

  6. Yeah, so anyway: Italy’s debt as percentage of GDP is way less than that of the US. Ireland is the 6th-richest country in the world per capita; they can grow their way out of debt. Spain’s is about the same ratio as the US; Portugal’s is probably too high at about 100%, but its economy is 1/60th the size of the US, and 1/5th the size of Italy–they’re hardly going to drag down the rest of the world. These countries’ budgetary issues are too complicated for an idiot like me to be able to critique effectively; my point is that the markets sometimes are irrational and overreact. I think the fact that they shot up Monday bears this out. As always, it’s best to look to the long term and not be alarmed by daily fluctuations.

    Paul Tullis

    May 11, 2010 at 2:49 pm


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