Wednesday, May 19, 2010
What You Should Know About the Greek Bailout Tragedy
The Problem is Never Solved, Only Postponed. It's interesting that bailout plans seem to have to come up with bigger and bigger dollar amounts in order to falsely satisfy the public that "something" is being done about the problem. If these measures are really a solution, why were they not tried five or so years ago when the problems began to surface? The fundamental problems of the Greek welfare state are not even being addressed in the bailout. Which means that in the next few years, after this latest "fix" has dried up, Greece will be back at the trough, claiming that they didn't get enough help. This DemocracyNow clip shows that the Greek populace is becoming savvy to the real problem.
The Problem is Perpetuated in Order to Benefit the Super Rich. Nothing is being done about the problem. Rather, the same thing that was done with the Troubled Asset Relief Program for the super rich in America. Of TARP, Naomi Klein, author of "The Shock Doctrine" wrote that "the financial sector bailout has never been about fixing the problem. It's been about using the crisis as a pretext for the greatest transfer of public wealth into private hands in monetary history. That's not to say that there isn't a crisis, just that the people in charge are less interested in fixing it than in taking care of their friends who take care of them. It's straight up pillage." Who is getting the major benefit here, while the Greek economy continues to tank? The big banks.
"Too Big to Fail" is a Dangerous Lie. The majority of the debt of Greece, as well as Portugal, Ireland, Italy, and Spain (together known as the PIIGS countries) is held by a handful of large French and German banks. Without the international Greek bailout, and others that are sure to follow, many of these banks would have failed.With the bailout, they are now free to offer as large executive compensation as did the major investment firms in the United States who were protected by TARP.
The Welfare State is A Major Culprit. The Greek financial tragedy has surfaced in large part because Greece has been borrowing to fund payments to welfare recipients. Hoping that their house of cards wouldn't fall anytime soon, the Greek government has been falsifying its financial reports, hoping that no one would notice how bad it really is. Kind of sounds like the United States in miniature, doesn't it? And we want to add health care to our own burgeoning welfare-mess-created unconscionable levels of debt?
Moral Hazard Makes People Stupid. Moral hazard is defined as the behavior that is encouraged and usually occurs when someone is not required to take normal risk. In the United States, large firms like Goldman Sachs and AIG knew that their friends in government would bail them out of any bad decisions they made, and they were right. Those few large banks in Germany and France expected that they would get similar help, and they were right, too.
Setting the Stage for Bigger and Better Bailouts, Coming to a State Near You!!! The Federal Reserve is helping to bail out Greece. The International Monetary Fund is helping to bail out Greece. That means that the American debt holder (that would be you), as well the American taxpayer (i.e. you as well) is being left holding a larger and larger bag. But since the Fed and the IMF are bailing out foreign governments, how likely do you think it will be that they'll soon begin bailing out floundering mini-welfare states in the US, such as California and Massachusetts? Quite likely, I predict.
In a day when progressives claim that everything needs to be solved collectively, I suppose they have no compunction with Americans bailing out the rest of the world, even though we have nothing left in our own economic gas tank?
Big bankers and their friends in government have gotten very adept at decimating economies. How is it that big bankers and their government friends always profit in the process? That should tell you something. It is not free market capitalism that is causing the increasing divide between the have-everythings and the have-nots. This fault can be laid squarely at the feet of the whores of unabashed corporatism. Let Greece be a lesson to us all.