Let me draw up an analogy for you.
You have $100,000 in your account, so you take your checkbook and go on a little spending binge.
You write checks for a new corvette ($50,000), a 1955 Classic Mason 45 Ketch sailboat ($30,000), five bottles of Remy Martin Louis XIII Cognac ($10,000), one of these foreclosed houses ($40,000), and $20,000 in cigars to top it off.
Nice work pal.
Unfortunately, you just wrote checks for one hundred and fifty grand on an account good for one hundred. Assuming your revenue sucks (and it does), and you can’t just deposit more cash (you can’t) you have something of a situation on your hands, now don’t you?
So here’s my question to you: which of the below answers fixes this problem?
(1) Ignore the problem and hope it goes away
(2) Beg the people you made the checks out to not to cash them
(3) Balance your budget going forward
(4) Take out a massive loan from yourself
(5) All of the above solutions fucking blow and you’re pretty screwed
If you answered (5), congratulations; you don’t totally suck at life. To everybody else: I hope you realize how dumb you’re being. There is nothing – let me repeat that: nothing – that the EU can do to avoid this hit. Unless of course your name is Marty McFly (or just The Fly), and your solution is to go back in time and stop the EU sovereign nations from being retarded.
If you are not fortunate enough to be a time machine wielding adolescent or Plutonium Petey, then I’m afraid your faith is misplaced. The EU has tried (1) determinedly, but unfortunately it’s difficult to not notice the mobs of people you owe money to preparing to rip through your living room to set your house on fire. When that failed, they sort of skipped to (2), trying to get creditors to just roll the debt over or take a “voluntary” haircut.
As it became obvious that they were not going to EFSF this problem away, then they started talking about balancing their budgets going forward. Ask anyone who has ever over committed their checking account how well balancing a budget going forward helps you. Fascinatingly, your past obligations still overdraw your account, leading to havoc.
Which led us to (4). The problem is convincing some of you that (4) is actually as silly an argument as it sounds, as most of you don’t have a printing press (or savings, for that matter). But precisely because it sounds ridiculous, I see lots of you are convincing yourselves it’s a real solution. It isn’t. Printing money will simply transform this whole affair from a debt crisis into a currency crisis. So sorry, but the LTRO will simply cause this problem to manifest itself in another way. And not all money printing leads to inflation. Sometimes, money printing leads to quick, short inflation, which almost immediately leads to crippling deflation when the savings of citizens are depleted and demand collapses.
Which leaves us with (5); admitting you’re pretty fucked and going forward. I don’t see what’s so hard about this option, but some of you seem incapable of honest assessment, so the euro goes above 1.32 while the Greeks adamantly burn their city-states to the ground. If that seems illogical, it’s because it is.
I am very sorry to offer you this rude awakening but: this crisis does not end with Greece, and the euro has not stopped going lower yet.
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If you are a politician, you care not about risks beyond the election year or next few elections. Because politicians are sick self centered individuals, even more so than the rest of us. If our cells which make up our bodies operated on their own rather than working together as one cohesive unit, we would die of an autoimmune disorder and our body’s cells would attack each other, or perhaps enough of us will figure out not to behave that way and that everything is okay.
We are consuming the earth and competing to own it. So many take more than they give back. It is an unsustainable mentality that causes the economic problems and emotional ones and physical ones,etc. If things don’t change the human race shall be it’s own downfall and it has less than a century or two left depending on the ability of a select few to be able to innovate. Fresh water supply, oil supply, mineral and material supply. At the current rate we have around 100 years but we will certainly innovate to last beyond that. However, life extension technology will be made available, so many of us will live to see the culmination and the “tipping point”
Great post!
The Greece Protestors are like robbers trying to rob a bum on the street. The government is saying “we don’t have any money” and the robber is saying “just give me your wallet man!
government “But I don’t have one!”
Indeed, the Euro has a long way to fall yet, just not against the dollar. It’ll rise against that piece of shit.
All will fall hard versus their golden superior.