Monday, May 3, 2010

Greek Economy

According to the Financial Times the Greeks have had rising expectations and lifestyles even though their public sector is inefficient and, I would guess, they do not produce enough to live at the level they do. The FT reports that under its recent agreement with the European Union, Greece will reduce it budget deficit from 13.6% to 3% of GDP, and public debt will "stabilize" at 140-150% of GDP. Eager to stabilize the Euro, the Europeans, especially Germany, are lending Greece 110 billion Euros ($146 billion).  The result of the massive loans and spending cuts will be a contraction of the Greek economy of between 2 and 4 percent.

The German people are unhappy with the large loans.  As nasty as the US bailout was, at least it was mostly paid to US firms, although I am not certain that I would like to remain in the same country as the bailout recipients like Goldman Sachs.  Indeed, I would like to see the Fed shut down, which would curtail if not close most of Wall Street.  But in any case, the Germans must feel like fools for seeing their wealth be squandered not for incompetents of their own tribe, but of a different tribe.

Be that as it may, the big question is whether this frittering of $146 billion will work.  Perhaps in the short run, perhaps not.  In the long run, are you kidding?  They lend $146 billion to profligate clowns, and then expect what?  Isn't this just another version of sub-prime lending?  If the Greeks want to live as though they have economic freedom, might they consider adopting economic freedom as a policy instead of mooching off others?

The quicker the US can disassociate itself from the Fed, the better.  For the political use of the nation's money supply is but a way to divert wealth from productive Americans to thieves of various kinds. Wall Street, the federal government, incompetently run businesses, public contractors, foreign governments, all will benefit at the expense of hard working Americans under the authoritarian yoke of the Federal Reserve Bank.  And how effective has the Fed been at generating long term full employment? 

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