FedUpUSA

Stiglitz’s Answer: STEAL!

 

From Bloomberg yesterday, and upon which I commented on Blogtalk…

“You have to have some form of mutualization of past debts,” said Stiglitz, 69, who served as chairman of President Bill Clinton’s Council of Economic Advisers from 1995 to 1997.

Don’t you love words like that?

Mutalization.  It sounds like such a friendly word.  Something that people do who love one another.  A good thing.  A pleasant time.  It was mutually agreeable.  Wow, who could possibly complain?

It’s nothing like the reality of what’s being proposed by Stiglitz, and thus is dishonest — intentionally so.

Let’s see if we can put this into terms that make sense for everyone.

You want a Porsche.  In fact, you want a really nice Porsche.  It costs $80,000. You don’t happen to have it.  So you borrow the money and then buy the car.  So far so good.

Except you can’t pay back the $80,000, and you knew that when you bought the car.  You made a promise you couldn’t keep, on purpose, because your ego and the admiration of those around you was the only thing you gave a damn about — honesty was so far down off the bottom of the list that you couldn’t find it below your feet.

Now the bank is calling on a daily basis, threatening to show up with “the hook” and take the car back.  Desperate to keep your status symbol (and the admiration of your co-workers) you hatch this scheme.

You will “mutualize” the debt among your neighbors!

So now you own the car, but everyone else pays for it.  You keep your friends, but your next-door neighbor is responsible for $20,000 of the cost.  The guy across the street?  Another $20 large.  And so on.

Life is good, right?

(Got kevlar in the form of a vest?  If you try something like this in the real world you’re gonna need it!)

This is what Stiglitz is really talking about.  German citizens didn’t vote for Spanish, Italian, Greek or Irish pension plans, salaries, working conditions and social programs.  Neither did the people of the Netherlands.  Nor did any of the other EU nations’ people.  They didn’t vote for it, they didn’t get a voice, they weren’t heard.  The money was borrowed under intentionally false pretense, with the people doing the borrowing fully-aware that it was mathematically impossible for them to pay; those borrowings were simply bribes to the electorate by their respective governments.

Now, having done this, they want to “hug” everyone in this “mutual admiration” deal.

In a word, no.

Stiglitz and the rest of these clowns need to be exposed for what they’re actually advocating — raw, blatant, “in-your face” theft.  This sort of advocacy needs to be met with a slammed door on his and the rest of the kleptocrats’ fingers.

Not only is such a “plan” facially outrageous in what it actually envisions, it is also mathematically unworkable.  There is nowhere within that plan a realistic and honest look both forward and back at the situation facing these countries and a clean assessment of what they can afford and therefore must do in terms of budgets for tomorrow and beyond.  Instead everyone is focused on evading and avoiding the truth — that government cannot spend more than it takes in via taxes, and that the role of government must be limited to that which can be funded in the present tense.

“The Spanish banks will be very weak if you wait that long,” he said. “The system may fail completely or lending will become so constrained that the economy will go further down and you’re involved in a vicious downward spiral. Things are bad now, and they’re going to be getting worse.”

Someone should have thought of that before they loaned out money people couldn’t pay.  The proper resolution for people who loan out money on purposeknowing full well that repayment is unlikely is that they must be allowed to go bankrupt and the bubble they were trying to inflate must be allowed to pop.

The error in trying to maintain these bubbles and evade the consequences of these actions is that doing so will somehow make things “better” or “soften the blow.”  It will not.  Such actions will do only one thing — make the problem worse by allowing the compounding function to continue to escalate the damage that must be absorbed in order to return to a sustainable economic condition.

The Market-Ticker

Discussion (registration required to post)
Share

Comments

comments