Because we called the latest Eurobailout a PR hoax in our most recent commentary, we’ll give equal time to a quite different point of view posted in the Rick’s Picks forum. The author is “Cameroni,” a frequent contributor who says the European Union deserves praise for not shunning Greece and the PIIGs, especially since it will require considerable sacrifice on the part of the “haves.” Here’s Cam:
“The European Union must be congratulated. They have acted responsibly by choosing union over self interest and Nationalism. Instead of shunning Greece, shutting her out and locking the door behind them they have instead made a tremendous sacrifice and have opted instead to take a share in Greece’s misfortunes despite the obvious risks. And they have put their collective neck on the line for the whole union by establishing what amounts to an insurance program for the rest of the sick patients in the group. The pain will be shared while expectations of future growth have been lowered.
“At the same time they have sent a clear message to bond rating agencies. You can be replaced. Nobody needs a Rhodes Scholarship anymore to see the clear connection between the Bond raters and currency speculators. Nor do we need a microscope to see how destabilizing those influences can be nor how quickly the global financial system can be brought to the brink of economic calamity. The events of the last two weeks has made it clear to all just how disruptive those influences can be and what negative implications it has for both political stability and global markets. Their blunder will bring on change.
No Child’s Game
“This is not a child’s games anymore. Future financial reforms may well include putting limits on the speculation of currencies. We will see what transpires with the G20 meetings next month in Canada. I think it is safe to say that some dramatic reforms could well be in the offing. There is simply too much at stake to allow the greed and opportunism of a handful of people married to the lightning speed of computers and established market practices to impact the very stability of nations. We just witnessed a very close call with a bad destiny. A Euro in sharp decline combined with extreme fear, even panic and markets in flight. There were no fat fingers. The near crash was precipitated by a panic sell-off that triggered backstops and cascaded the market downward in a whirlwind of computer generated trades. Many investors and some traders were not even present to witness it all except on the six-o-clock news. Suddenly presets and program trading is in the spotlight. Will we allow computers to crash the system any more than continue to tolerate speculators bringing no less than the stability to the European Union into doubt?
“But with so much liquidity sloshing around the system and always on the lookout for better investing opportunities, it has instead found easy kills in currency markets. Fortunes can be made in the blink of an eye. Counties can be ruined. And it is all too easy when the targets are so public and vulnerable and systems are in place to capitalize on those misfortunes. Capital is now being misallocated in the most dangerous and irresponsible way. Short term gains are surely going to lead to big long term losses.
Taming Speculators
“This is not hunting for bargains. It is more like shooting chickens in a barrel. That is why the European Union has done the right thing and why I congratulate them. They have taken steps to tame the speculators and rescued their own currency through policies that will bring stability back to the Eurozone.
“Now if only those pesky Greek citizens would just get on board and cooperate it just might work.”
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cameroni – you’re veering even further off the path of rationality with your latest comments :).
We should not bail out Greece, this is very true. But why? Is it because the Greeks don’t deserve it, or because they’re too selfish, or because they brought it upon themselves? While all of these are true in some sense, the bigger reason is simple: we don’t have the money. After all, governments have been overspending for decades and eventually they’ll have to fail. Greece is just lucky enough to go first; it’s merely a random selection. The UK, Spain, Portugal, Venezuela, Argentina or even the US could have been first, but the luck of the draw went to the Greeks… Random chance doesn’t provide the same opportunity for your moral pontificating and self righteous indignation, so obviously it isn’t favored by many commentators.
You are right that we must start paying down our debts, as we cannot expect our creditors to bail us out, like we’re bailing out the Greeks. The Greeks do not deserve our money, and we do not deserve China’s money — but as long as China is stupid enough to give it to us to prolong the day of reckoning, then we’ll take it and live large until the end, I guess…
You are quite wrong, however, saying that a debt default or lack of a bailout will cause a deep, long lasting depression and large tax increases. We’ll have a deep depression to be sure, but as long as the bad investments and debt are cleared away, it will not last too long — a few years instead of a few decades. To get a decade-long depression, you need continual government interference.
I find it funny that you believe “seriously curtailed services at all levels of government” and “political instability” to be bad things. We’re in the mess we’re in because the government has tried to provide too many services, few of which it has any business providing. I for one would welcome some political instability — it would be nice if people simply quit trusting their politicians and refused to allow the Federal government to continue its decades-long power grab.
I also do not understand how you can view gun owners as the “lunatic fringe”, seeing as how a significant portion of the country owns at least one gun, and more than a few own dozens of them. If anything, a heavily armed population will keep a lid on any rampant crime problems, when push comes to shove.
Your comment regarding “shooting Gophers for stew and guarding their little piles of gold for barter while in general wreaking havoc on what remains of the environment. That should make the RV experience a little more interesting!” is rather outlandish… How you make the leap between survivalist types eating gophers (which aren’t very good — try rabbits or possum) and destruction of the environment is a little beyond comprehension. Maybe you’re just jealous of not having a few extra boxes of ammunition of your own, eh?
Another great depression is not “unthinkable”, it is the only scenario that will allow the economy to be cleaned out of the cruft it has accumulated over the years – and to be is the preferred scenario. The alternative is a long, drawn-out continual recession where taxes are excessive, government control greatly increased and the economy stagnates for decades, destroying much of the wealth accumulated over the last hundred years.
A war will not solve the problems we have today – it will merely exacerbate them, along with shifting the problems a little from one place to another, depending on who wins and who loses…