Wednesday, February 24, 2010

Update: Greece

More on the Greek crisis:
A one-day general strike crippled Greece's transport and public services on Wednesday but is unlikely to halt government austerity measures to tackle a debt crisis that has rocked the euro zone.
As tens of thousands of strikers marched through Athens to protest against EU-prescribed tax hikes and pay cuts aimed at reducing a double-digit deficit, Athens and Berlin traded accusations about World War Two reparations.
Greece is the first domino.  Greece itself is insignificant, but that's not the point.  The point is this will cripple the EU.  We've already seen sovereign debt problems in places like Iceland, Dubai, Latvia...but Greece is the first within the EU.  If Greece gets a bailout, Spain, Ireland, Portugal and Italy will soon be in line.  Divisions will obviously arise from sensible prudent players being forced to bailout the ridiculousness of the PIIGS.
The Socialist government hit back at European criticism of Greece's fiscal management, accusing European Union partners of double standards and poor leadership.
Deputy Prime Minister Theodoros Pangalos said Italy, France and Belgium had used the same techniques as Greece to mask their true deficits to qualify for the euro zone.
He said Germany was ill-placed to criticize Athens given its conduct during the Nazi occupation of Greece in World War Two, including the looting of central bank gold reserves, prompting a reaction from Berlin.
Obviously Greece isn't the only player in this mess, they're just the canary in the coal mine (that's assuming you previously ignored Latvia, Iceland and Dubai).  The cracks are there, and soon enough the other players will be exposed for the games they were playing as well.  For everyone declaring the US dollar dead...wake up.  The US has it's problems, for sure, but their problems pale in comparison to those of Japan, and the sovereign debt problems of the EU, along with the even higher levered European banking system. 

Naturally, the unions are at the forefront of the Greek problems:
The public and private sector unions, which together represent half of Greece's workforce of 5 million, want the government to scrap plans to freeze public wage, hike taxes and increase the retirement age.  
"Today, Europe's eyes are turned on us," said Yannis Panagopoulos, head of the private sector union GSEE. "We ask the government not to give in to the desires of the markets, to set people's needs as a priority and adopt a mix of economic and social policies that won't lead to recession but to jobs."
What planet do these imbeciles live on?  Do they understand that if the government get's its money to pay its union members from the lending of bondholders, then they derive their paychecks from the market itself. Sure,  they can do as the unions suggest, and say "Fuck you" to the market, which will result in nobody in their right mind buying Greece's worthless public debt which will cause the cost of borrowing to skyrocket, and Greece to implode.  But maybe the EU will bail them out...after all, if the market won't, it's clearly the responsibility of German and French taxpayers...

On a much more relevant note:
Canada 7 Russia 3.



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