The Proud March of the Financial Lepers: Greece Leads the Way Down for California and Other Beggars.

Abstract: The world is sinking in debt and our political leaders have no clue or solution to the problems. Their only response is apparently to print more money and salvage errant states like Greece and California. We have no responsible financial leadership on the planet anymore, at least not in power, and equity markets will not be happy with this uncertainty.  The EU may crumble over this mess as Germany will not keep wasting money on financial lepers such as Greece and Spain. Watch the Dow plunge 1000 points on this news.

The angry Germans want to throw out the Greeks:

“BERLIN, Feb 14 (Reuters) - A majority of Germans want debt-ridden Greece to be thrown out of the euro zone if necessary and more than two-thirds oppose handing Athens billions of euros in credit, a poll published on Sunday showed.”[1]--Germans say euro zone may have to expel Greece-poll By Madeline Chambers Berlin, Feb 14 (Reuters) [Emphasis is mine in all quotes.]

We always have to wonder about government and its tacky relationships with their citizens and how they handle elementary elements of reason. There must be some magical veil that protects politicos from scrutiny in their dealings in their respective societies, wranglings with international leaders, debt, spending and other matters. Apparently, many citizens, such as in Greece, believe that some popcorn peddler can pony up to the podium and promise jobs, benefits and a Great Society to the cheering crowds and then drive the whole system into bankruptcy and default along with currency debasement and other pains and make the outcome rosy and sweet. According to the new book This Time is Different: Eight Centuries of Financial Folly [2] by Carmen Reinhart and Kenneth Rogoff this process of overspending, massive debt, bank crises and defaults are very common in the last several centuries. Here is a link to a transcript of an interview.[3] Since this happens so often we must assume that the headlong flight into debt is some intrinsic human attribute in the low or mentally disnimble classes. The elitists, crowned with PhDs and other honors such as Nobel Prizes seem to offer ‘advice’ that encourages more government and more spending and a faster track into financial oblivion. This must be the Ivy League Plague.

Rogoff now counsels Germany to assist Greece:

“Harvard University economist Kenneth Rogoff even warned Germany could face similar problems to Greece.

"Germany's public finances are not on a sustainable path," Rogoff told Welt am Sonntag. "There will come a time when Germany will have its own Greece problem ... it won't be as bad as in Greece, but it will be painful," said Rogoff.

“Germany's budget deficit is forecast to grow to 5.5 percent of gross domestic product in 2010 and Merkel has vowed to consolidate the deficit as soon as the recovery allows.”

“However Rogoff, a former International Monetary Fund chief economist, said helping Greece was unavoidable.”

"As long as Germany isn't ready to kick Greece out of the euro zone, it must help," said Rogoff who also said an option would be for the Greek government to secure bridging credit.” -- Germans say euro zone may have to expel Greece

One fails to see the solution here. Germany is also spending too much so along crawls a leper and refuses to do any thing abut her diseases and begs for alms and her sisters are encouraged to throw money at the problem at their own financial peril. Germany is advised to throw money after bad!? For what purpose? To preserve the European Union? If Germany has some financial problems then do they improve if the Germans hand over some cash to the Greeks? How does that help?

Apparently, and only apparently as the financial facts are not all that transparent to any inquirer, the EU is an ensemble of states all on the brink of financial disaster:

“"We fully support the Greek government and their commitment to do whatever is necessary. A quote from  Mr. van Rompuy "”[4]-- How Greece exposed the slippery slopes of Europe.  As European leaders gather to discuss the fate of Greece, Andrew Gilligan finds half of Europe broke, the currency tottering, and a president that can't read a speech. by Andrew Gilligan  Published: 7:00AM GMT 14 Feb 2010  [Emphasis is mine in all quotes.]

We can only guess what that means.

This was the concluding analysis by Andrew Gilligan:

“For all its pretensions of unity, Europe is made up of two very different kinds of country.

Greece is the most extreme example of the first kind – corrupt, profligate Mediterranean places where tax evasion is rife and governments have brazenly lied about their finances. Germany is the opposite – northern, thrifty, and responsible, the EU's cash cow. The two kinds of nation, whose economies are not really compatible, were not ready to share a single currency at all, but the political desire for the broadest possible union was so great, and the Mediterraneans' wish to join the club so strong, that blind eyes were turned. In the long term, the euro can only succeed if the Mediterraneans and northerners narrow their economic differences.”-- How Greece exposed the slippery slopes of Europe. 

This Greek Problem reminds me of California[5][6][7][8] [Our National Leper] and its incompatibility with financial fitness, morality, sobriety and society.[9] How do you narrow economic differences between prudent states and cavalier spendthrifts?

Let’s have bigger government!

“The French, and indeed Mr van Rompuy, are pushing the idea of an European "economic government" – a political semi-union that can simply impose, from Brussels, the reforms needed to achieve convergence across the euro area. To hard-core Eurocrats, this week's crisis is just one more opportunity to press ahead with Project Superstate. An economic union is, of course, the logical consequence of a currency union.”-- How Greece exposed

Well! There you have it!  What is important is to just let the Greeks slide into financial oblivion because they know some well-meaning public servant will crawl around and then dish up other people’s money and shovel it into their own private Greek conduit for their pleasure. Doesn’t the prospect of spending other people’s money make you all fuzzy and happy inside?

The price for not being independent and being to manipulate their own currencies:

“Denied the usual economic remedies – lowering interest rates, or devaluation – by their membership of the single currency, they will suffer economic stagnation, mass unemployment and shrinking public services.

For a long time to come, the people of Greece, Italy, Spain, Portugal and Ireland will pay a terrible price for buying into the euro dream. If the euro itself did not die last week, the dream certainly did.”--How Greece exposed

Of course, the EU has no plan to deal with all of this and don’t need IMF help they say.[10] We must wonder here that what would be different if the PIGS exited the EU [or never joined in the first place] and tended to their own devices. Would we expect less socialism and more financial competence?

The Brits are now thankful that they did not become ensnarled in the euro:

“British schadenfreude [pleasure derived from the misfortunes of others[11] e.d.] has reached new heights of delicious self-indulgence. There is feverish market speculation that Greece will default on its debt, leave the euro and create a eurozone crisis as other members are pushed by the markets into following. It just proves that the euro is and was a disaster, the thinking goes.”[12]-- Don't laugh at Europe's woes. The travails facing Greece are also ours. The struggle to stop Greece from becoming a failed state and to make the euro work is one for all Europe, including Britain [Emphasis is mine in all quotes.]

Notice that there is no plan here only speculation. Greece, like Spain and California, in its own realm, must do what to stay in a system that coddles them and tolerates their greedy excesses and lack of responsibility on many planes? They don’t have to do anything but spend and spend and spend. There is no barrier to how much these failed states can bring down some of their more stable sisters.

Notice that this is a spiral, pointed downward, and devoid of wise counsel or threatened by any penalties. If the EU issues euro bonds then the community will be collectively responsible for the miscreant Greek schemes and what will happen then? Issue some more bonds? Go deeper into debt.

There must be some world-wide influenza or fungus that is rotting the minds and souls of most of our political leaders.  They seem to believe that there is no risk to curing debt with more spending. We are going to pay for this big time. It will take a decade of defaults and severe social pain before the voters get sick of the contagion and throw out those idiots who cannot handle debt.

To maintain stable credit markets in a global community requires some stability and this slobbering exercise by the ‘leaders’ of the EU does nothing more than light the fires of uncertainty in world markets and demean the current notions of responsible credit. Look for major market problems when idiots like these are allowed to wiggle their jaws in public with no special inputs from their brains.

Take 1000 points off the Dow for this.

rycK [a 5^th generation Californian in exile]

Comments to: ryckki@gmail.com