On national level bailouts

Brian Moore

I live in Germany. The question is if Germany bails out Greece, then they will soon be bailing out other troubled economies such as Italy, Spain, etc. A Greek rescue is about as popular among Germans as the AIG, CitiBank, etc. rescues are in the US. What would be the US position if the the US had to raise taxes and go deeper into debt in order to bail out Mexico after a spending binge? It's easy for Americans to tell Germany to pay up. Maybe the US tax payers should rescue Greece instead?

Mrs. Merkel and her party need to win elections in here Germany, not Greece or in Brussels in order to remain in power. Telling German voters that their tax monies are going south so Greeks can continue to retire with full benefits at age 52 while the retirement age is being raised in Germany to 67 doesn't sit well here. Furthermore wages in Germany have declined over the last 10 years while prices have increased, so most workers are very skeptical of the benefits of the Euro.

Greece got themselves into this mess, bhe powerful money men will find a way to rescue the Greek elite at the expense of German workers and on the backs of the Greek people. At the same time, they will make a tidy profit in the transaction. The question I ask is if Germany bails out Greece, Italy, Spain, etc. who will bail out Germany when the bill comes due? Certainly not Greece.

Brian Moore


It was Mark Twain who said famously, "History doesn't repeat itself but it sure does rhyme a lot!"

Right now we're right about 1930-31, when a false economic dawn led governments to relax and clamp down. We're about to make the same mistake again. We forget that it was the collapse of a bank in Austria that caused the second vicious stage of the Great Depression.

Similarly, Greece seems also not to be a tipping point in terms of how it will affect the center in the US and Western Europe. Yet, every week this drags on reminds global bondholders that the US and all other westerm countries are far more indebted than they were in the 1930s. And, as Krugman points out in his post-World War II example, the US used inflation to bail its way out of heavy indebtedness. People, that's not something lenders really want to hear, especially from a country that's running trillion dollar deficits.

Ominously, the differences from the 30s are not good. Consumers, always expected to bail out the economy when interest rates are dropped, are far more indebted than back then. Businesses are far more leveraged as well. Who's left? The Chinese?

Governments are basically stalling for time in the hopes that a miracle will somehow bail us all out.

But all miracles have already been tapped and Greece is the miner's canary telling us what lies ahead. If 2008 was the hurricane, then right now we're in the calm of the storm before it hits again, this time closer to home. To paraphrase another great American writer, Ask not for whom the bell tolls, it tolls for you.

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