Dang man, hope you are getting some sleep.
I only wish the common american understood that the us tax payers could really being footing a bill to bail out a ing country most of us don't give a about or will ever visit.
They would laugh at your face like those stupid mind-slaves in china who believe the massacare at Tienanmen square did not really happen.
This is what happens when you live beyond your means. Sooner or later, it comes back to bight you in the ass.
America continues to do it, runing those humongous deficits, which is nothing else but spending more than what you are making. At some point in time, countries have to start saving money to pay theird debt.
Meh, not really. The world can support a fairly high standard of living.
What the world cannot support is the corruption in the highest levels of financing. Companies giving out multi-billion dollar bonuses like they're free candy at a parade.
I'm estimating vastly here, but from looking at the numbers, Wall Street corruption (meaning insider information, illegal collaboration, etc.) has done more damage to this country in the last 15 years than all other crime and corruption in the history of the US combined. The amount of corruption and profiteering in our system now is cataclysmic. And the people who are supposed to be protecting the system have been bought and sold like they're part of the stock market.
This would have happened if the citizens of the U.S. continued to live frugally, because the companies would still have found ways to overpower the system as long as the government was turning it's head.
WH you're not seriously advocating tieing currency to a benchmark for value purposes are you? Do you really want to go back to a barter system and its limitations?
Huh? I was criticizing countercyclical measures as being possibly related to the declining purchasing power of the US dollar. You don't have to be a gold bug to criticize that.
Huh? You mean, like we had before before 1971?
That wouldn't be the worst thing in the world, IMO.
I think I'm misunderstanding you so maybe you could rephrase in one post what your point was?
I love supporting Big, Huge, Gargantuan Business and the Old World with my taxes.
Bailouts like ours are foreseeably bad for the currency. Better?
Also, it's likely that the number of money bazookas we have is limited. Maybe it would've been wiser not to waste the shot.
They're absolutely bad for the currency. The question is whether they're worse than doing nothing at all. Sometimes you're not presented with a good option but merely a bad and worse option.
I honestly can't say for certainty that this won't end up badly, WH. But I do believe many of thing economists I've read say this was a needed action.
Although I'd like to read opinions of experts you have to the contrary.
I can't think of any experts who agree with me.
We might as just well put a robe around big banks and recommend they change their logos to scepters and/or crowns.
I don't know if there is anything that can be done. Greece was on the verge of defaulting on it's payments. If that happened, you could see all of Europe fall into chaos. Despite the fact that it might cause a worse situation later, I'm not sure we can handle Europe virtually imploding overnight. You think the stock market has been bad? It would drop 3000 points in a day, maybe more, if Greece defaulted.
So..... there's nothing that can really be done at this point, IMO.
Maybe every now and then, the market needs to crash. Maybe, every now and then, TBTF's and nation-states need to taste their own mortality.
We could acknowledge the various defaults, let them happen and allow the markets reset accordingly. The political price for that would of course be unacceptable, but it will be again when the rest of the world loses confidence in our ability to pay.
Eventually, we could have default and a debt-deflation crash not so much in spite of, as because of, all our attempts to avoid it.
The idea was to save Greece from sovereign default which was expected to knock on to much bigger Spain, and Ireland and Portugal.
Initial euphoria wore off quickly, like next day.
==================
# The New York Times
May 11, 2010
In Greek Debt Crisis, Some See Parallels to U.S.
By DAVID LEONHARDT
It’s easy to look at the protesters and the politicians in Greece — and at the other European countries with huge debts — and wonder why they don’t get it. They have been enjoying more generous government benefits than they can afford. No mass rally and no bailout fund will change that. Only benefit cuts or tax increases can.
Yet in the back of your mind comes a nagging question: how different, really, is the United States?
The numbers on our federal debt are becoming frighteningly familiar. The debt is projected to equal 140 percent of gross domestic product within two decades. Add in the budget troubles of state governments, and the true shortfall grows even larger. Greece’s debt, by comparison, equals about 115 percent of its G.D.P. today.
The United States will probably not face the same kind of crisis as Greece, for all sorts of reasons. But the basic problem is the same. Both countries have a bigger government than they’re paying for. And politicians, spendthrift as some may be, are not the main source of the problem.
We, the people, are.
We have not figured out the kind of government we want. We’re in favor of Medicare, Social Security, good schools, wide highways, a strong military — and low taxes. Dealing with this disconnect will be the central economic issue of the next decade, in Europe, Japan and this country.
Many people, including some who claim to be outraged by the deficit, still haven’t acknowledged the disconnect. Just last weekend, Tea Party members helped deny Senator Robert Bennett, the Utah Republican, his party’s nomination for his re-election campaign, in part because he had co-sponsored a health reform plan with a Democratic senator. Economists generally think the plan would have done more to reduce Medicare spending than the bill that passed. So, whatever its intentions, the Tea Party effectively punished Mr. Bennett for not being a big enough fan of big government.
Or consider the different fates of two parts of President Obama’s agenda. Mr. Obama has unrealistically said that taxes do not need to rise on households making less than $250,000, and this position has come to be seen as an ironclad vow. He has also called for billions of dollars in sensible cuts to agribusiness subsidies, tax loopholes and the like. The news media and Congress have largely ignored these proposals.
The message seems clear: woe unto the politician — in Washington, Athens or London — who tries to go beyond pla udes and show some actual fiscal restraint.
This situation obviously can’t continue, as Robert Greenstein, perhaps the leading liberal budget expert, points out. Mr. Greenstein’s politics make him sympathetic to the worry that all the deficit talk will become an excuse to pull back on stimulus spending while unemployment remains high or to gut social programs. But he also knows the numbers well enough to understand that our Greece moment, whether it takes the form of a crisis or not, is coming.
“Most of the public thinks, ‘If only the darn politicians could get their act together to cut waste, fraud and abuse, and to make tax avoidance go away and so on,’ ” Mr. Greenstein, head of the Center on Budget and Policy Priorities, says. “But the bottom line is, there really is no avoiding the hard choices.”
•
For Greece and possibly other European countries, change will come from the outside. The countries lending the money for the Greek bailout — chiefly Germany — are demanding big cuts to the welfare state. Greek citizens will soon have a harder time retiring in their 40s.
Here in the United States, we’re likely to have the chance to solve our problems before our lenders demand it. Those lenders continue see the American economy as a safe haven, thanks to our history of strong economic growth and political flexibility.
It is even possible that future growth will make the current deficit projections look too pessimistic. That sometimes happens when the economy is weak. In the wake of the early 1990s recession, for example, almost no one imagined that the budget would show a surplus by the end of the decade.
But the main issue isn’t the near-term deficit — the one created by the recession, the wars in Iraq and Afghanistan, the Bush tax cuts and the Obama stimulus. The main issue is the long-term deficit.
As societies become richer, citizens tend to want better schools, better medical care and other government services. This country is following that pattern, but without paying the necessary taxes. That combination has us on a course to Greece-like debt.
As a rough estimate, the government will need to find spending cuts and tax increases equal to 7 to 10 percent of G.D.P. The longer we wait, the bigger the cuts will need to be (because of the ac ulating interest costs).
Seven percent of G.D.P. is about $1 trillion today. In concrete terms, Medicare’s entire budget is about $450 billion.The combined budgets of the Education, Energy, Homeland Security, Justice, Labor, State, Transportation and Veterans Affairs Departments are less than $600 billion.
This is why fixing the budget through spending cuts alone, as Congressional Republicans say they favor, would be so hard. Representative Paul Ryan of Wisconsin has a plan for doing so, and it includes big cuts to Social Security and the end of Medicare for anyone now under 55 years old. Other Republicans have generally refused to endorse the Ryan plan. Until that changes or until the party becomes open to new taxes, its deficit strategy will remain unclear.
Democrats have more of a strategy — raising taxes on the rich and using health reform to reduce the growth of Medicare spending — but it is not nearly sufficient.
What would be? A plan that included a little bit of everything, and then some: say, raising the retirement age; reducing the huge deductions for mortgage interest and health insurance; closing corporate tax loopholes; cutting pensions of some public workers, as Republican governors favor; scrapping wasteful military and space projects; doing more to hold down Medicare spending growth.
Much of this may be unpleasant. But by no means will it doom us to reduced living standards or even slow economic growth. We can still afford to spend more on Medicare — even more per person — than we do today, and more on education, the military and other areas, too. We just can’t afford the unrealistic promises that the government has made. We need to make choices.
“It’s not a matter of whether we have the resources to solve our problems,” as Alan Krueger, the chief economist at the Treasury Department, says. “It’s a matter of political will.”
For now at least, our elected officials are hardly the only ones who lack that will.
================
No politicians have the political will to even talk to the country straight, never mind having the political power to Do The Right Things (above).
I work late. Sometimes it takes a couple hours to wind down.
That's always been the answer. But would many suffer for a few's mistakes?Maybe every now and then, the market needs to crash. Maybe, every now and then, TBTF's and nation-states need to taste their own mortality.
Sure. Big time. But you don't cap a rotten tooth, you remove it. Leave it in, and sepsis can eventually kill the patient.
I remember the days that I thought capitalism could work in earnest.Ah, to be young and naive again.
http://www.realclearpolitics.com/art...ke_105552.htmlThe Consequences of Not Letting Greece Go Broke
By Robert Robb
Surely it would have been better to let Greece go broke.
The Greek national government doesn't have the cash to service its debt and private parties aren't willing to lend it any more. The natural solution would be for Greece to default and restructure its debt. Those who imprudently lent to Greece would incur a loss. The Greek government would have to curtail its spending to match what it could raise in taxes and from more demanding lenders.
Instead, euro zone countries cobbled together a $145 billion bailout package, designed to relieve Greece from the need to raise private capital for a couple of years.
Rather than calm anxiety about euro zone sovereign debt, rate spreads between fiscally shaky countries (such as Spain, Portugal and Ireland) and sounder ones (principally Germany) increased sharply.
So, euro zone countries cobbled together a $955 billion bailout fund over the weekend for all euro-denominated sovereign debt.
The rationale is supposedly to prevent contagion. There are two fears. One is that the default of any euro zone country on its public debt would have cascading effects on the economies of other countries. The second, more profound, fear is that the default on any euro-denominated sovereign debt would adversely affect all euro-denominated sovereign debt and the euro itself.
These fears would seem grossly overwrought. Banks and other private parties in other countries hold Greek debt, but not in the sort of concentrations to represent serious contagion risk.
The euro is a currency, a medium of exchange. The default of one borrower in a particular currency doesn't reflect upon the creditworthiness of other borrowers using that currency or the soundness of the currency itself. Indeed, as Greece was finding it more expensive to borrow, Germany was finding it less expensive.
These bailouts will have serious adverse consequences, for Greece and the euro zone's future.
Greece has to undergo a severe austerity program. If the spending cutbacks were because Greece defaulted on its debt and couldn't borrow any more money, the Greeks would have no one to blame but themselves.
Instead, the austerity program comes as a condition of the bailout funds from other euro zone countries and the International Monetary Fund. So, there are strikes and riots in Greece, claiming that the spending cuts are unnecessary and are being foisted on Greece by nefarious outsiders.
Some think that this is good, allowing local officials to take painful action while outsiders get the blame. But that does not make for a healthy democracy or more prudent future political choices.
Rather than contain contagion, these bailouts actually ins utionalize it. Basically, the euro zone countries have said that we are no longer independent political economies that share a common market and a currency. Instead, if any of us are sick, then all of us may have to pay the hospital bill.
And they increase doubts, rather than alleviate them, about euro zone public finances and the soundness of the euro.
Most of the larger $955 billion bailout package takes the form of off-budget borrowing that nevertheless will be guaranteed by euro zone countries. So, the solution to too much government borrowing is even more government borrowing, only less transparent and secure.
And for the first time, the European Central Bank will buy dodgy sovereign debt private investors are shunning. The ECB says it will offset these purchases with the sale of other assets to avoid expanding the monetary base. But that means that the ECB will be trading good securities for bad ones. Regardless, monetizing sovereign debt isn't a path toward either fiscal discipline or a sound currency.
Prior to the bailouts, Greece's fiscal indiscipline didn't really jeopardize the euro zone enterprise. Now it does.
http://www.ft.com/cms/s/0/eedbe85c-5...44feab49a.htmlWhether or not one believes that the €750bn European rescue plan will stabilise financial markets, its consequences for Europe’s economies are surely negative. Indeed, while many cheered the initial rebound in equity markets, the reactions in currency markets on the first trading day after the announcement were a harbinger of these negative consequences: the initial gains of the euro were erased by the end of the trading session.
Of course, the bail-out for holders of Greek government debt – and now possibly Spanish and Portuguese government debt – raises familiar problems of moral hazard that will increase risk-taking and encourage irresponsible government policy in the future. The loans and loan guarantees from other countries in Europe do not deal with the simple fact that the Greek government cannot service its debt and will eventually need to restructure it. At best the package gives officials some breathing room as they endeavour to reduce deficits and eventually restructure debts, though it is more likely that the adjustment problem will be made worse by being pushed down the road.
But most worrisome for the euro, and the likely reason for its remarkable reversal in the currency markets on day one, is the agreement by the European Central Bank to buy the debt of the countries with troublesome debt burdens, just days after it said it would not engage in such purchases. This agreement raises questions about the independence of the ECB, thereby creating political obstacles to the conduct of good monetary policy in the future.
Krugman pretty much refutes the US/Greece comparison making the rounds today on his blog.
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