Sunday, April 17, 2016

Remember Greece?

Greece is the bailout that keeps on taking.

Rather than simply let Greece go bankrupt, way back when the Greek national debt was relatively small and mostly owned by German and French banks and a smattering of hedge funds, the political leaders of the Eurozone decided it made more sense to "extend and pretend."

So, that they did.

So, where are we now, after seven years of pushing more Euros to the profligate Greek economy and extending a lifeline that gets more and more costly every day?

Predictably, the Greek economy is a disaster. The bailouts have done nothing to improve the economic lot of the Greek people.  Quite the contrary.  Incomes have collapsed, businesses have been destroyed, crime is rampant, the tourist industry is devastated.  Nothing good has come of the Greek bailout by its fellow Eurozoners.

What about Greek debt?  That is the only thing that has an uptick.  Greek debt, which at the time of the crisis was just about 100 percent of GDP is now more than 200 percent of GDP and rising.  Greece is in worse financial shape today than at the time of the initial bailout.

Germany's Angela Merkel is the main culprit in all of this.  Swinging Germany's mighty political clout behind the bailout schemes has made certain that they would take place.

Along, the way, the International Monetary Fund got involved.  The IMF is expressly forbidden by charter to get involved in bailouts.  But, of course, that they did.  Now, even the IMF is coming to the realization that they have thrown good money after bad.

This leads us to the current crisis, an annual affair these days.

Unless the IMF caves to Eurozone pressure, Greece will run out of money in July.  Hence, Merkel and company are busy pressuring the IMF to look the other way and give the broke Greek government more money.

If there is such a thing as a "bubble," this has got to be it.  Ever rising debt levels funded by foolish and pernicious European political leaders, with a backdrop of rising poverty in Greece, just goes up and away.  (This is Bernie Sanders' dream scenario for the US, as no one becomes responsible for anything.  Mysterious government bailout money carries the system endlessly into higher and higher debt levels).

We already know how this ends.  It's just a matter of time.  Not only will Greek end up going bankrupt, but so also will the Eurozone and once-mighty Germany.

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