Monday, February 6, 2012
A Greek tragedy
If you thought this was about the play Electra you're on the wrong page.
Greece situation - Good god this amazes me. Greece is set to default on their debt and the European Union wants more austerity for the country. It's as if finding a starving person you tell them to get more food you'll have to eat less and the food they'll be given will need to be stored to pay me back interest on this food. Only here we're talking about money but actually it isn't money. It is debt and promises and bringing hardship on people most of whom had nothing to do with the problem. I can just about see how this will all play out. The loans will be made then neatly packaged and leveraged and sold again to some unsuspecting fund manager in the attempt to rebuild the house of cards. They (investors) will of course buy a hedge against a collapse at a very high price and again the insurance will be underfunded. And when the music stops and the bill comes due we'll be right back where we started.
And what could be gained through a bankruptcy? A default would do no less harm. Greeces' primary problem stems from the fact that the bulk of their income comes from tourism which has been wiped out with the current economic downturn. This could be a glimpse of things to come in the U.S. if we keep outsourcing our manufacturing. It's been reported that we have lost 45,000 factories (not jobs but whole factories) over the last ten years a trend that can not continue. We may have added a couple of hundred thousand jobs in the last month but in what areas?
I see today Merkel and Sarcozy are becoming impatient at Greeces' foot dragging. Can you blame Greece? They get a choice of two poison pills. Take your pick red or green either one will kill you. But if they wait they'll infect the doctor causing him great pain. Interesting Mexican stand off we have here but we know the clock is ticking because Greece has until March to make a decision. Nothing like waiting until the last second before the bomb goes off but in this case it'll go off anyway you look at it. Imagine if you were hit with a 29% tax bill and hearing that the government wanted yet more? I have to ask just how do you squeeze blood out of a turnip Ms. Merkel and Mr. Sarcozy?