Archive for the ‘Money’ Category
What got Greek in trouble is already a plague on America.
Where we are all heading and why.
Is it too late to fix?
“Instead of forcing the banks to join in the inevitable pain that Greek citizens are going to bear, the government has instead protected the banks from their own lending folly. As this crisis spreads to other countries, at some point one of these governments will seek the Icelandic solution, or the EU and the IMF will run out of lending capacity, and a sovereign default will occur. We will be right back to where we were in 2008 during the height of the credit crisis: no one will be lending to anyone else. Once again, as occurred in the 1930s, you will hear people lament “no one has any money”, because truly no one will. The average investor’s stock and bond holdings will be decimated, individuals will be selling hard assets to survive, and credit will be impossible to find (it is already in the US).”
Just how many times is Greece going to announce yet another financial bailout? Even the markets are getting jaded by this never-ending game of brinksmanship. What would otherwise be greeted as good news is this time treated with skepticism, and rightly so. If you remember when this financial crisis first erupted months ago, Greece needed about $25 billion to stave off bankruptcy. It was also felt that the EU members would foot this bill alone, since Greece would never endure the shame of asking the IMF to participate in the bailout.
This week’s deal is announced as a three year loan program for €110 billion, or $174 billion, with the IMF joining in the loan to Greece. My how the debt has grown, and no one is saying whether this number well and truly incorporates the hidden debt that Greece took on with the connivance of Goldman Sachs in order to avoid EU restrictions. Whatever it is in the way of belt-tightening that is going to be demanded by the IMF, it probably shrivels in comparison to what Greece’s European partners are requiring.