April 28th, 2010

  • tridus

Greece's economic meltdown

Here's an interesting BBC article that talks about how much money Greece might actually need, and why it's getting hard to find. CBC also covers the dramatic rise in borrowing costs (10% last week, up to 25% this week after a Standard & Poors downgrade). Somewhat predictably, that downgrade got the EU upset at rating agencies, as if they're the problem here.

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Now, the problem is that a lot of this bailout depends on Germany. German taxpayers are displeased at the prospect of using their tax dollars to prop up a government that borrowed its way into the abyss and will likely never be capable of repayment. Germany has elections coming up in May, so displeased taxpayers actually matter right now. If Germany doesn't join in the bailout plan, it's entirely possible not enough money will be available to service all of Greece' debt, which would trigger a default. As Greece is a eurozone country, that would affect the euro, and markets everywhere (more so then it already has). It could also scare off lenders in other countries that are heading in the same direction (Portugal also had their bond rating cut, but not as low as Greece).

On the other hand, if Germany does bail out Greece, will they then have to bail out Portugal, Spain, Ireland, and Italy? Is that even possible?

There's a number of things the community can discuss on this. To get things started, I'll come out and say that I think Germany should NOT go through with the bailout. They should kick Greece out of the eurozone instead.

Germany has no guarantee that Greece will actually get its act together if a bailout happens, or if they will continue to spend and hope for another bailout later. They have no guarantee that investors won't expect them to also bail out the other weak countries. Greece dug this hole all on its own by electing govenrments who kept spending money they didn't have.

The only way to stop this in the end is for Greece to start running balanced budgets, at which point it becomes possible for them to service the existing debt. Greece has thus far been unwilling to do that, and until they are a bailout package will simply delay the inevitable while adding a lot of new debt to German taxpayers that didn't do anything wrong.

(I realize this is usually a US focused community, but this is a pretty large issue affecting markets worldwide right now, so I find it interesting. As the US is also running huge deficits, it's also a chance to glimpse into the future.)

Supreme Decision: The VFW gets its Mojave acre

Here is a Greenwire article about the recent Supreme Court decision to side with the Dept. of Interior on its transfer of an acre of land to the VFW in order to preserve a religious icon. This is a pretty mundane issue, but some purists may agree with the minority that this is a support of a specific cult. It may seem strange that the VFW chose the symbolic tree of state killing to commemorate WW-I deaths. At least they don't set it on fire like the guys in that white supremacist organization.

I feel sorry for all of those families of war dead who are not members of the cult in question. I don't have any immediate family who participated in that conflict. If I did, I would not feel that the VFW represented those members.

I'm perfectly comfortable with the VFW monument in the national park, especially since they will own the land under the monument. What are your esteamed opinions on the matter?