Cash-strapped Greece on Tuesday raised the money it needs to avoid default when a Treasury bill matures later this week, but investor nerves are unlikely to be calmed as negotiations for the next slice of much-needed aid continue.
The rift among Greece’s official lenders over how to pare the country’s growing debt pile spilled into the open late Monday, complicating efforts for an agreement that will free up a long-delayed aid payment to the country. The European Central Bank’s reluctance to provide additional money to Greek banks poses a risk to the government, which in order to keep afloat has depended on support from local banks to sell its debt.
Repeating lies does not make them truths.
Fiscal deficits are identical in economic form and function to a tax, but that tax falls not only on income (“earnings”) but also on saved capital, and as a consequence is extraordinarily destructive to capital formation and thus economic progress.
“Financing” such deficits is identical in form and function to abusing stimulants to evade the requirement to sleep. It “works” in the short term (that is, it allows you get up and go to work) but it slowly destroys the economic vitality of the nation (as this abuse destroys your health over time) and thus makes it more-difficult to find a sustainable balance and increases the amount of damage you must absorb when you cease the abuse.
The longer the lying goes on the worse the problem is. Greece and the European Union cannot resolve their problems until they tell the truth. The media is not doing its job so long as it continues to be a part of the lying.
The United States cannot find a solution so long as we lie about the same thing; there is no simply no solution that comes from continued deficit spending, no matter how we allegedly “finance” it.
Greece is now headed for the wall with the pedal mashed to the floor, and the remainder of Europe is right behind them. Some time in the new year, by my best estimate, Italy, Spain, France or all three will hit that wall.
And so, incidentially, will we in the United States.