So Monday’s euphoria of a Greek deal has subsided as EU finance ministers dismiss the proposal as not going far enough.
As I have said this will not get resolved anytime soon. The reason for the stalemate is how draconian the results would be for the Greek people.
Yes, the Greeks do retire very young, so therefore the government has a huge pension liability. The Trioka — the IMF, the ECB and the European Commission — want to use the cash set aside for pensions to pay for the debt, which — say what you will — is a promise that can’t be broken by the Greek government.
Jumping over to the US, look at the growing number of people on government support, just over 50% of US households receive a government check each month.
This is what socialism looks like in Greece and in the US.
Now what if China told the White House, we will not buy your debt and in fact we will start selling it, if you don’t cut spending and reduce the deficit?
Well the US is on an unsustainable path when it comes to spending, just like Greece, the difference right now is we “control” our currency, Greece does not and therein lies the problem.
Neither government can support the programs they have enacted and yet US Treasury chief Jack Lew has urged the Greek government to accept the draconian measures and hurt their people in order to pay back the banks that extended credit to the country. The Trioka are working as agents for the largest banks.
Should Greece actually make payments, that money would be funneled through the IMF to Deutsche Bank and other large lenders including US bulge bracket banks.
To paraphrase Bruce Springsteen, Greece has debts that no honest man can pay. That goes for the US as well.