Jun
27
2015

Greece: the remarkably important looming financial crisis you’re not hearing about.

And when I say ‘looming,’ I mean: it’s almost a matter of looking at your watch.

I don’t suppose that the administration has any kind of plan regarding this?

Greece’s long-running standoff with its European creditors appeared headed on Saturday for an abrupt — and potentially cataclysmic — ending as the continent’s finance ministers rejected an emergency Greek request to help the cash-starved country meet a Tuesday deadline for paying back its debts.

The development, just hours after Greece’s prime minister stunned the continent with plans to hold a nationwide referendum on Europe’s latest proposals, makes it increasingly likely that Greece will default — and could soon crash out of the euro zone altogether.

…Because – and this is a bit of an issue, really – Greece is in fact a formal ally of the United States.  NATO, and all that.  It might not be in our country’s best interests to let Greece go take a swan dive out a penthouse window.

Mind you, I’m more sympathetic towards the administration than usual, because I’m blessed if I can think of a viable thing to do here, either*. But I’m not actually sympathetic towards the administration, because nobody forced Barack Obama to run for and win the office twice, and if he’s going to play at being an Imperial President… well.  Then go decree something, your Imperial Majesty.

Moe Lane (crosspost)

*I’m very much an amateur at this sort of thing, but it certainly looks like the problem is that Greece wasn’t controlling its spending prior to 2008, got hammered in the economic freefall, and hasn’t been able to tough it out until this unnaturally-extended global stagnation finally ends (probably some time in late 2017). It doesn’t help that the current Greek government is promising its voters unlimited pie. …Baklava? Or perhaps chak-chak – but I suppose that that’s just old Cold War reflexes on my part.

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13 Comments

  • Luke says:

    Because if we don’t talk about it, it won’t happen.
    (Despite all evidence to the contrary.)
    .
    This was foreseen and predicted before the fool’s errand of the Euro began.
    It didn’t make any difference.
    Just like those of us screaming about our own government issuing many times our National Gross Product worth of bonds, the vast majority of which are in short term instruments that need to be rolled over every six months or so, are ignored, and will continue to be ignored.
    The problems are blatantly obvious, but too horrible to contemplate. So everybody pretends they don’t exist.

    • 1_rick says:

      ” the vast majority of which are in short term instruments that need to be rolled over every six months or so, are ignored, and will continue to be ignored.”

      So the Fed is fueled by payday loans, eh?

  • acat says:

    There are some golden opportunities here..
    .
    Putin lacks the gold…
    .
    Obama doesn’t hear opportunity knocking
    .
    Mew

    • jetty says:

      Russia’s debt to GDP ratio is one of the lowest in the world, and their public debt is well under $1 trillion. America’s debt is somewhere around $18 trillion, and that will only grow. From my limited view (and when it comes to global finances, it is very limited), it seems like Putin has the gold and opportunity.

      • Luke says:

        That’s the official numbers, in which the government excuses itself from most accounting principles, up to and including counting debts as assets. The unofficial number was 130 trillion the last time I looked. It’s certain to have increased since then.

      • PenultimateMohican says:

        That is super misleading.

        Russia has a low debt-to-GDP ratio — like many LDCs — because it is poor, corrupt and no one is stupid enough to lend it money.

        Russia’s GDP is a bit over $2 trillion USD or about 1/8 of US GDP. Its per capita GPD is about 1/4 of US per capita GDP. Even this miserable performance is very heavily dependent on oil revenues.

        Russia’s population is aging and will eventually shrink.

        There is really not much positive that one can say about Russia, economically.

        Putin has a large stockpile of nukes and some decent rocket technology. That is all he has.

        • jetty says:

          You’re right on all counts, but as you indirectly pointed out, they have practically no debt. What is worse, being corrupt, $18 trillion in debt to other countries that are stupid enough to lend you money, or being corrupt and not in debt because other countries are smart enough to not lend you money? Hmmm…that’s a stumper.
          .
          And speaking of stupid, the Russian’s bailed out Iceland not too long ago. Why didn’t America/Europe step in for a measly $6 billion and help out?

  • Herp McDerp says:

    … Greece is in fact a formal ally of the United States. NATO, and all that. It might not be in our country’s best interests to let Greece go take a swan dive out a penthouse window.
     
    You seem to be proceeding under the assumption that having the United States, NATO, and the West become weaker is something that Barack Obama would not want. If so, I believe that you most likely are wrong.
     
    More and more, I am coming to believe that Our President wants to smash the existing civilization, so a new order can arise in which the Superior People (i.e., he and his cronies) can run the world according to their whims.
     
    Can someone provide evidence to the contrary? Anyone? Bueller? Anyone?

  • Brian Swisher says:

    Pfff…the current government of Greece wasn’t even offering unlimited baklava…they were elected on the promise that they could crap in a bowl and call it Wheaties.

  • Lady Penguin says:

    Speaking as one of proud Greek heritage, I say let them fall. They’ve been doing (for decades) spending, spending, spending. Most of the jobs in Greece are GOVERNMENT jobs and pensions associated with that. To avoid riots in the streets(which happen anyway)- they won’t accept austerity measures, which is why and how the new Leftist just took over – promising an “end” to the austerity measures Greece had agreed to for debt aid. The new guy was convinced the spigot would never be turned off…

    Until you turn off that spigot, they will keep doing what they’re doing. Let them go. Let the rest go like dominoes and the EU collapse. Maybe then, they’ll start thinking about saving their own darn countries. The EU is nothing more than an authoritarian socialist governing monster that has aiding in the demise of Europe, not strengthening.

  • Bird Dog says:

    It’s probably too late for this, but Greece could cut their defense spending to the NATO average and use the savings to pay for 3/4 of the total pension obligations. The problem is that Greece is one Germany’s and France’s best customers when it comes buying military hardware. However, the Greeks could proceed with the defense spending cuts, then stop all orders for military items from their EU creditors, then stop all outstanding payments for military items ordered from those EU nations. They could say that it’s more important to pay pensions than enrich French and German coffers.
    It shouldn’t be necessary for a fellow NATO member to do this, but the U.S. could provide security assurances to Greece in the event of Turkish military aggression (the purported reason for their larger-than-average military) against the Greek nation. This would send a message to an increasingly belligerent and Islamist Erdogan (who seems to favor the Islamic State over the Kurds) and allow Greece to get by with a dramatically reduced military without fear of being attacked.
    However, even if Greece exits, they still have an abysmal fiscal track record, riddled with incompetence and ludicrous tax and spending policies. They would have more than a little trouble selling bonds with their new currency.

  • jaytrain says:

    So the crux of the Greece problem is government spending and that spending is for pensions and bloated staffs . This has been going on for a couple of decades , at least . Having access to cheap euro group loans kept the party going up until 2008 took that punchbowl away . But the ever helpful IMF went round to the store got some more hootch and the party kept going . Until now .. What next , I dunno but should be both fun and sad to watch . BUT , where this does play out here is the looming ( not yet check your watch looming) debacles of Caly , Ill , NJ and Puerto Rico . It is the same poison : excessive spending handed out to the connected unions . As long as the cost for this stays in the affected individual states , not a problem , except for those affected states ( Sox to be you , NJ ) . But like the fire bell in the night let us be on a vigilant watch that the errors and excesses of the affected states stays in those affected states . But one can hear the Left already claiming ” Fairness ” and ” Temporary ” and ” Emergency ” in order to federalize the debts of those states . In other words , to keep the SEIU/ AFSCME party going . Let me go all pithy in closing , ” You Have Been Warned “

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