The old joke goes something like this: What international incident occurred when the waiter dropped the platter of turkey on Thanksgiving day? Well, of course, the downfall of Turkey, the destruction of China, and the overthrow of Greece.
It seems the Greeks do not need any help from a waiter, thank you very much. After generations of living in debt, subsidizing business, and getting paid for not working, it is time to pay the piper, so to speak.
Promises are cheap, and the Greeks have offered up another promise so that the IMF will re-structure their debt to avoid defaulting. (going bankrupt) Too bad, but they are already
bankrupt. So what is the promise? To raise $110 billion over the next 5 years with new taxation and austerity programs. (read less spending, and that is what the riots are all about) But this amount would not even repay the $157 billion bailout the EU and IMF have already provided.
$110 billion over five years is $22 billion per year. But just last year their shortfall was $34 billion and the year before it was $52 billion. And of course, any shortfall is added to the debt, which has to be paid back, but in the interim, interest has to be paid on it. Right now, Greek bonds are yielding 17%! What an investment, you say. But would you buy Greek bonds? Talk about a risky investment.
Back on our side of the globe, our neighbours to the south are in the same predicament. Why do they not have rioting in the streets and a call for refinancing or default? It is because they are avoiding the inevitable by printing money, something the Greeks cannot do because they do not have their own currency but are tied to the Euro.
I say we hang on to our hats, because when the huge austerity measures come to a country near you, watch out for the same riots amid fog banks of tear gas.