Greece’s Deal with the Devil
The Greek crisis is a toxic mixture of politics and economics. The showcase euro zone project is in jeopardy from a looming sovereign default of one of its members.
Greece made a Faustian pact with the European Union that allowed its political elite to freeload the system, using EU transfer money and cheap credit for local political patronage instead of building a sound goods and services economy.
The euro destabilized the balance of payments. Local production waned and imports soared. Price inflation led to pressure for wage increases. Greece lost competitiveness. Public debt mushroomed to finance never-ending public sector deficits. For many years the EU blinked.
The EU elite, fearful of the Lehman precedent and protective of their scandalously undercapitalized banking system, have chosen a contradictory approach of debt bailouts to cover creditors by musical chairs and wage and price deflation austerity.
The Devil is now seeking his due. Greece is locked into an ever-growing debtor’s prison with a shrinking GDP causing its tax base to implode. The rising mountain of debt is currently 150% of GDP, shortly to rise to 170% with the next bailout loan on the pyramid. Unemployment is skyrocketing; shops and businesses are closing. The government cracks the whip, cursing its own people every time unrealistic tax revenue projections fall short, creating ever more draconian penalties for tax evasion. This climate seeds an increasing flight of capital and lack of investor confidence.
EU policies are terrorizing periphery countries with deep recessions and mounting unemployment, creating disorderly default risk from rising social unrest. Northern European taxpayers are also growing restless and upset over ever-growing demands for bailout money from Brussels, as the periphery sinks under the growing debt overhang. They are concerned that these are stealth transfers with growing doubts that the periphery has the capacity ever to repay the money.
Nobody in the EU is happy. The more EU voters see Brussels asking for taxpayer money to bail out banks and socialize losses, the angrier they get. This causes growing discontent with the whole EU system. The EU elite seem smugly sure of themselves, appointed with secure positions rather than democratically elected. Politicians in member countries face a rising storm. Few have the courage to openly express their discontent for fear of ostracism from the Brussels elite for daring to question them.
“So far the EU elite refuse to discuss successful restructuring techniques in past emerging market crises. The markets presently see 80% prospects of a Greek default.”
This is such junk. Greece already IS in default. They owe somewhere in the neighborhood of half a trillion (with a “T”) dollars and have absolutely no prospect of paying it back. None. Given the size of their country, the number of taxpayers they have, and the huge social welfare benefits they still pay to their people, there is no way Greece can honor its debts.
And the northern European countries in the EU are fed up with bailing Greece out and, frankly, I can’t blame them. The Germans, Dutch, and the Scandanavians are not pleased with what’s going on in Greece and are about to turn off the money spigot. Greece is a black hole of debt and Greece keeps coming back for more money while having no creative ways of increasing revenues. And even if they did, the debt is so huge now that a structured bankruptcy, coupled with a total destruction of the social-welfare state, is probably the only way to save the country. But if you think any of this is going to happen, especially in a country that is filled with socialists, communists, and anarchists, you’re dreaming. Greece already IS in default because they are openly telling bond holders that they will have to take a “haircut,” or reduction, in the money they are to get back. That already means they are IN default if they carry through on that plan.
We should all be paying attention with what is happening in Greece because, if WE do not get our financial house in order, THAT will be our future, and in the not too distant future as well.
I love how Krugman and Roubini are cited as having the solutions to the problem. Roubini correctly diagnosed the debt crisis, I will give credit for that, but his bromides are socialist, as are Krugman’s, the dyed in the wool marxist.
The socialists/Keynsians, creators of the unsustainable welfare utopia that is predictably imploding, are now offering the solutions. Their policies have eaten out the heart and productivity of europe, yet they know how to solve the problems of the EU. What a laughable circumstance that is.
The Keynsians are always wrong. Always. If Europe and America are to recover the spending must be dismantled and saving and investment in the private sector must be fortified. That means the state has to relinquish its role.
If the people of Europe want to control their future, they need to adopt the policies of Friedman, Von Mises, Hyeck and Hazlitt. It is Keynse and Marx who have created your miserable future which you have thus far supported. Time to wake up.
Since Angela Merkel at least has a modicum of common sense (multiculturalism hasn’t worked), I keep hoping that she will be courageous and withdraw Germany from the European Union. I read somewhere that there are millions in newly printed deutschmarks in banks in Germany, all set to go if Germany quits the EU and abandons the euro. Germany is the country being tapped to pay for all the European bailouts. Let’s hope they get fed up. I can’t see an end to this crisis other than the collapse of the EU and adoption of free-market economics in the individual countries in Europe. Once again, socialism and its centrally planned economy fails. And, this is what Obama wants for us. It makes no sense.
“The markets presently see 80% prospects of a Greek default. ” This says that the markets SOON see 80% prospects
“As it stands presently, there” This says that “as it stands soon…”, a non-sequiter. People writing even as a hobby should know about this. “Presently” should be eliminated from the above sentences, even replacing it with “currently” is to add superfluous wording.
GRAMMAR NAZI ALERT!!!!
The USA should withdraw from NATO, then enjoy the show. All the evils that will befall the EU will be of their own making. Let’s enjoy it. I’ll bring the popcorn.
I agree whole-heartedly; withdraw from NATO, that organization lacks any kind of direction for where to take US-European relations. Then once Europe and the EU fall apart, we can reap the rewards by taking their best and brightest; those with capital who want to start a small business but can’t in their country because of economic turmoil or government intervention can come to America; citizens living in European countries where home-schooling is illegal can also come to America; and so can other obvious conservative families and individuals; it will be great; the US will basically be like John Galt and take the productive members of European society.
But they’ll have to swim the Rio Grande to do so.
Nato is being subverted by the EU with it’s actions in Libya. That this has occurred is only because we have a feckless weak-kneed Obama at the helm. NATO has become the ‘defensive’ arm of Europe to take Qaddafi out. Who is next for such treatment? We have no interests in Libya other than to be concerned for the general welfare of the people – Europe has many business dealings and ties to Libya – let them utilize their own forces to topple that dictator and protect European interests. Most of the funding for NATO comes from the USA – as does most of the ‘muscle’ that is the forces of NATO.
We need to end this subversion of our $’s and armed forces and pull out of NATO – then use those forces to surround the UN and ask them to leave. If they refuse then we can use extreme force to remove them.
End of 90% of the world’s problems…
The other 10%? Iran. I’d do what I did with a young man that came courting my daughter after knocking up a neighbor’s daughter – I grabbed him by the collar and stood him up against the wall with his feet dangling and told him if I ever saw him near my house or with my daughter I was going to kick his ass.
Never seen that young man again.
With some people there is no reasoning other than threats…
Whatever works, eh?
No government can sustain itself with Krugman policies because, in my view, they are based on elites dediding how to give other people’s money away to more and more people withOUT any accounting. Do you think Krugman drops signed blank checks outside his front door for the needy to drop by and help themselves? Unknown beneficiaries? Of course not. On the other hand, a government agency that gives money away is apparently no problem. You gather up all your W-2′s and 1099-MISC to report your income but the ‘income, redistributed’ does not have it’s 1099-GOV equivalent. Why? Because power comes from the end of an IRS agents gun.
Indeed one must be a delusional idiot to believe the Greek people will actually follow either sell out Elected Officials in Greece or EU Bankers in their plans for the destruction and sell off of Greece .
Make all the “agreements” you want “Transfer” title of Greece’s choicest economic morsels.. Greeks have dealt with would be conquerors before..
No Romans, Turks or Germans succeeded in the past for long… and today no EU Bankers, Internationalists nor Crony Capitalists will break the people nor steal the land of Greece.
Those who try, know neither history nor the Greek people.
Vassily
LOL!
Then you can starve in the dark.
if we do so then we will do it like always fighting with dignity. no retreat no surrender
5000 ++++ years of history should be a reminder
Good luck with that. So who will you unleash the Spartans upon first? Persia?
“THIS! IS! A WELFARE STATE!”
“Thanks to our infantile entitlement mentality, the Greek government will have to curtail utilities to provide our plush benefits.”
“Then we shall mooch in the dark.”
“Unlike cruel Germany, who demanded that we stand, we require each other only … to squat.”
“Tonight we dine on THE EU’S DIME! And tomorrow, come to think of it. And Wednesday…”
Vassily, I will try not to be mean. Does Greece even manufacture a washing machine or refrigerator? Let alone a car that anyone wants to buy. Modern warfare is not waged with Spartan killers. It is all about land labour and capital. If you can’t compete then you plug along with a second rate tourist economy … like Greece. I’ve spent a few weeks in Greece. Toured around the islands. But for the agriculturists producing olive oil and wine your country is full of really lazy unmotivated people. Typical socialists. (communists too)
Hmmm- the Romans ran Greece from 197 BC for over half a millennium. They took it from the Macedonians (Greek-speaking non-Greeks) who had conquered the place 150 years prior. The Turks owned it for a half-millennium themselves. Toss in the Venetians, and you have country which has had barely a scrap of independence except as the Byzantine Empire for the past 2000 years- and I don’t see a Theodosius or Justinian among the current bunch of politicos.
“Kid Richie”
Most people ridicule the idea of world conspirators but the more I try to think of an explanation for all the “man-made” financial turmoil caused by “Progressive” politics, the simplest explanation is: “World Conspiracy”. Isn’t that Occam’s Razor?
What is the conspiracy? It is “Agenda21″, that evil plan of the United Nations to bring down all governments and install a global government to control (enslave) all the populations of the world! The modern-day Socialist Progressives create the crises then exploit them.
Every socialist state is nothing less than a giant Ponzi scheme and such schemes are always doomed to collapse! That’s what’s happening in the countries of the western world and is happening in the USA with Obama as the prime example of a socialist President. He lies and distorts everything to continue his plan to ‘fundamentally change” the USA (his words).
“Has Europe sold its soul for a lifetime of the welfare state?”
Uhhh … what soul? Godlessness is as Godlessness does. And yes the US is in line for the same dreck. You God-fearers have had warning after warning after warning. Get your stuff together and prepare yourselves. Don’t count on being ‘raptured’ out. The real Bible scholarship on the Tribulation is heavily weighted to the post Tribulation Resurrection. Jesus does not come 2 and 1/2 times. Watch for the eagles gathering.
Do not be sucked into the idea that this is a Christian nation and we will be spared or protected. As a people we are guilty of millions and millions of abortions. Now we have condoned and protected perversion and deviant sexual behavior. We teach the benefits of such in our schools. The US is the modern day Sodom. So prepare yourselves believers. You have a job to do in these End Times.
The Greeks seemed happier without the Euro…………….smoking cigarettes, drinking retsina, being idle.
Zorba……=happy.
Eurodebt serfdom, iPods, consumer junk……= misery.
“Annual income twenty pounds, annual expenditure nineteen nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.”
Greek debt? No problem! Greece as a political entity will simply disappear as the Greek population leaves. This will be no different than a US homeowner walking away from his mortgage on a house that is under water. The overseas Greeks will return for vacations, but there will be no one to squeeze to pay the bills.
There is only 1 solution to the Greek problem:Let them vote in a communist government,expropriate all businesses,print money,raise taxes, give everyone a 100% wage increase,and make Obama honorary prime minister. The Turks are going to have a heart attack laughing!