Wednesday, May 5, 2010

No Good Deed Goes Unpunished

The Greeks are raising hell, and a hoard of criminals, to protest being rescued.

If life were fair and just, IF!, the Greeks would be out marching to thank the more productive parts of Europe for carrying them for so long... but that's not how it works, is it?

Greece's unions and social programs have DOOMED the country, and it will absolutely, positively default on its sworn promise to repay money it borrowed. In other words, the people supporting these groups and programs feel they are ENTITLED to STEAL money, effort, security, and resources from others. Does that sound so different from the agenda of WAR?

America's school teachers, firemen, police, etc... along with present day Social Security recipients and anybody else on the dole are doing the exact same thing here in the U.S. There is a REASON that the average non government working family has little to NO SAVINGS, will never have financial security, and the U.S. is sitting on a political powder keg of its own. Our government has confiscated the efforts of these people to satisfy the union government worker and those receiving benefits from the social programs! As a result, we have crazy people leaving car bombs in Times Square and flying planes into IRS buildings! WTF?! Our government, like Greece, needs to take the pressure off of the people that pay the bills - or you can expect this kind of miscreant behavior to increase in frequency and severity.

The U.S. needs to take are LONG, HARD look at Europe as it unravels, because that is the ultimate outcome here. The Eurozone will not survive the decade, and I question if it will survive the next couple of years. Boy, that didn't last long, now did it?

BTW, I harbor no illusions. There are simply too many true believers in the proverbial "free lunch" on this side of the Atlantic now, NONE of them holding any reasonable concept of economic reality. For years they have been looking to the economic model in Europe (and worse, Russia and China) with envy. It is impossible for them to accept that their lifetime belief system was a farce.

Yea, the EU (Germany) and the IMF might be able to hold Greece together without a "default" for a while. That's not a real fix under any circumstances. How much longer the balance of the PIIGS can hold it together remains to be seen.

The cure for too much debt is not more debt. The cure of a lack of production is not less production and more benefits. Greece's citizens are not paying for what they receive, and that is going to come to an end irrespective of how many windows they break, how many cars they set a fire, how many people are injured or killed...

Take a good, hard look America. This is where FDR through Barney Frank/Barak Obama has left you, with a LOT OF HELP from George W. Bush (who I think is a very good person, but who spent money like a Liberal and put us into wars that very well could undo the U.S.). There isn't a shred of difference between the policies of GWB and BHO, which can be summed up as "Kick the Can Down the Road".


Charles said...

The USA has a way to go before matching the Greeks - did you know the Unions there had managed to get some government employees retirement at age 53 on full pension? Did you know that Greek schools have 4 times the teacher/pupil ratio of Finland? (a country which is well known for its excellent education system).

No wonder Germany is pissed at having to bail them out!

PioneerPreppy said...

I don't know if we have all that far Charles. State workers around here retire at 55 and if you count the aides the teachers managed to get hired and mandated the ratio ended up being only about 12 to 1 or so. Of course come open parent night the teachers always forgot to mention the TA's they all had when bringing up the ratio of 25 or 30 to 1.

The local post master retired from my little town a few years back and didn't hide the fact he was going to be making more money by doing so. He was only 55 then.

I wonder why normal working stiffs aren't rioting at this point but I guess most just aren't aware.

Anonymous said...

This is hilarious. One socialist welfare state upset at another socialist welfare state for being better socialists than themselves. What do they think socialists do? Answer: Spend other people's MONEY!

Anonymous said...


There is plenty of blame to go around and not just for the "socialists".

When the GOP controlled everything 2000-2008, they were responsible for big Prescription Drug boondoggle, starting two budget busting wars, doubled the national debt in 8 years, passed tax breaks for corporations that offshored production, and lots more.

That doesn't change the fact that the democrats and/or leftwingers do not have a clue as to how economics works in a practical sense. Taxing the rich can go only so far. Free services for everybody only works on the upside of Hubberts Curve- if then.

Regards, Marshall

westexas said...

I have proposed that we are going to see something akin to the Export Land Model (ELM) in regard to government spending & services. I suppose that we could call it the Government Export Land Model (GELM) The ELM premise is that domestic demand is almost always satisfied before oil is exported. The GELM premise is that before money and services can be "exported" out of the government, government domestic demand, i.e., G&A overhead costs, debt service, pension obligations, etc., has to be satisfied (in many cases, e.g, pension obligations & debt services, this is the law).

So, the services that are important to taxpayers are, IMO, probably going to be disproportionately cut, while in many cases we are going to be seeing higher tax rates, especially because of underfunded pension plans.

westexas said...

The following title could be reworded as follows, "Los Angeles, like many other government entities, is on the brink of insolvency."

Even the tiny number of states, like North Carolina, that have more or less fully funded pensions plans are using very optimistic estimates of return on assets, in the 7% (or more) range.

WSJ Opinion Column:
Los Angeles on the Brink of Bankruptcy


"Los Angeles is facing a terminal fiscal crisis: Between now and 2014 the city will likely declare bankruptcy. Yet Mayor Antonio Villaraigosa and the City Council have been either unable or unwilling to face this fact. According to the city's own forecasts, in the next four years annual pension and post-retirement health-care costs will increase by about $2.5 billion if no action is taken by the city government. Even if Mr. Villaraigosa were to enact drastic pension reform today—which he shows no signs of doing—the city would only save a few hundred million per year.

Los Angeles's fiscal woes can be traced to two numbers: 8% and 5,000. Eight percent has been the projected annual rate of return on the assets in Los Angeles pension funds. Four years ago, we strenuously warned Mr. Villaraigosa of the dangers behind the myth of that 8%, only to be told by the city controller's office that our warnings were "based on faulty assumptions which are largely disputed."

How faulty were our assumptions? Over the last decade, the two main pension funds in Los Angeles have seen their assets grow at just 3.5% and 2.8% annually. Five thousand is the number of employees added to the city's payroll during Mr. Villaraigosa's first term as mayor. . . The mayor can't control the economy, but he could have chosen to control spending to keep the size of government proportional to the size of the local economy. Instead he's done the opposite: squeezing the city's productive workers to fund the salaries, pensions and other benefits of government workers."

Anonymous said...

State budgets are definitely the next 'shoe to drop'. The MSM did briefly cover this, and it has been nothing but silence since--actually all the cheerleaders are out again talking about the recovery. Some at least admit that "well those 8million jobs may not come back for another 5 years."

My guess is that most of those jobs lost, will remain so, and many people will take lower paying and part-time jobs eventually, or find a way to be added to roles of the welfare state.

Listening to what the Greek public sector people get is pretty outrageous, Sure it sounds nice--but if you can't pay for it, it was just a ticking time bomb. It will be interesting to see how long "fantasy island" can continue, and how people react, I tend to think Americans have become so pathetically obese, uninformed and apathetic--that some new cultural mindset driven by dissonance is likely the only thing that will have any chance of changing the course of the U.S. Titanic.


Greg T. Jeffers said...


It would seem that while the U.S. is using a .38 special to shoot itself to death, the Greeks are using a .357 magnum, maybe a .44 Magnum.

The outcome remains the same.

bureaucrat said...

Jeffers, here is a PBS Frontline piece on "College Inc." which kinda follows along with your thoughts on college these days ...

Dextred1 said...

Good find Bur.

The funny thing is that every college has online programs now. Not just these crappy ripoffs. The girl that works at my gym has a master of buis. from U. of Phoenix. She said it was the biggest waste of money. Every place she applies says that university degree is not worth the paper it is written on.

Dextred1 said...

By the way that is Plunder. It is all good though, we pay for them to get {edumaacateed} :)

Dan said...

Why should the Greeks be forced to pay, the best thing they could do is default. Before they joined the euro they were dirt poor with a history of defaulting on anyone dumb enough to loan them money. In very short order they will again be dirt poor and default on the dunces that loaned them money. While they won’t have large houses, cars and various electronic trinkets; they will still have excellent food, wine, sun, beaches and lots of sex. Why on earth would anyone want to work hard to repay the debt pushers when they’ve got all that going for them?

oOOo said...

from my friend in Athens who runs her own business:
The situation here in Greece is like going to a funeral every day. International press projects the wrong image. Anyway.. everyone is numb trying to react (because there were many choices than the one they imposed on us as the only one) and imagine how it will be in the future. I cannot. Anyway… anyway..

Lots of love from this sunny part of the world!

Dextred1 said...

We have a 17% stake in the Imf. I think they are giving 40 bil. leaving us with close to 8 billion invested. The best thing about the bailout is that the debt is junior to normal Greek bond auctions. Surprise!!!!

Greg T. Jeffers said...



The best thing for ALL INVOLVED is for Greece to default, and for all us no to do anything so stupid again.

As retired hedonist of the first order (I just don't have the energies of my youth)... I am with you on part B of your point.


Anonymous said...

Greek bonds, Spanish bonds, US bonds, UK bonds really only have a value of a few cents on the dollar, because none of these economies has the productive capacity to pay them off. There are only two choices. Default and realize the loss now, or inflate to reduce the value later. Either way, the value is already gone.


Coal Guy.

Dan said...
This comment has been removed by the author.
Dan said...

Paul Belien at The Brussels Journal nailed it:
"The irony of the situation is that Portugal is expected to contribute about €2bn of the €120bn in bilateral loans to Greece, and Spain some €8bn. Italy and Ireland, who are also burdened with debts, are to contribute some €12bn and over €1bn respectively. In other words: The insolvent are expected to bail out the bankrupt."
Absolute insanity!

Dextred1 said...

The real problem is that there are no children to pay for all the benefits the older unionized workforce receive in greece. There is no history to look back at. Birth control is relatively new phenomenon. In the past agrarian economy's kids were an asset. They helped production on the farm and provided a place to stay when you got old. Now they are a liability and everyone expects the state to steal from everyone to pay for people in their old age. That problem is also coming here with retirement of the baby boomers.

bureaucrat said...

There are lots of kids, but they are all in Asia and/or in Muslim nations (Middle East families have an average of 8 kids -- one of the reasons why stubborn Israel is doomed, as they are surrounded by these expanding families. He who births the most, wins :))

Once the Mexican girls in the U.S. become "Americanized", start working in offices and start having the usual 2 children (instead of 3-7 children now), who takes over for them in funding the American welfare state? Who is the next wave of U.S. immigrants? Either the Chinese or the Muslims, probably.

On an energy note, anyone notice the price per barrel for oil has dropped to $76 from $86? And we are still ramping up for summer driving season. Get ready for those pump prices to come crashing down. :)

Anonymous said...

Hey Bur!

As the Piigs roast,the $$$ gets stronger. Also, notice in this weeks EIA data, that we imported 10.5 Million barrels per day, and over 1Million barrels per day went into storage. I'm taking it that we buy everything we can get our hands on, and there is now 1Million barrels per day additional slack in world demand that wasn't there a couple months ago. Europe and China are both messing their beds. I'm thinking $45/BBl by the end of summer. Also, another 2-3 years until things get short.

As far as NG goes, it probably gets stretched out too, unless the volcano in Iceland gives us some really cold winters. How big is that eruption compared to Mt St Helens?

Got completely out of equities this morning. Nothing but bad news as far as the eye can see.


Coal Guy

Greg T. Jeffers said...

Coal Guy:

I think the landscape for asset prices is pretty grim, indeed...

westexas said...

Many things are possible, but it's worthwhile to remember that the average price of oil for 2010, through April, is $80, and the current price of oil (around $75) exceeds all previous annual oil prices, except for 2008, when we hit $100.

In any case, for what it's worth (not much) my prediction is that the average annual oil price in 2010 will exceed the $62 level that we saw in 2009.

Since 1997, we have seen three annual price declines--down to $14 in 1998, down to $26 in 2001, and down to $62 in 2009:

If we follow the same cyclical pattern that we have seen since 1997, the next annual year over year price decline will bring us down to the $120 range.

Anonymous said...

I predict Oil hitting a 100$ by the end of August, but based mostly on weather. I think we are due for another year of hurricanes that inhibit refining and distribution and add additional fear to the speculative price of oil. I think we another year off before the decline in exported oil become noticeable enough to get the attention of those who don't pay much attention to data lines on oil.

I also predict that Bur can still get his crackers and Gas, and that Chicago will have another 100 murders by September.


bureaucrat said...

The divide between the rich and the poor is as large as it has ever been. Our debt situation hasn't been addressed (still 350% of GDP in the U.S.), and poor people aren't going to buy oil products with no money nor credit, no matter how much they need it. No buyers means no demand means price decreases. China and India are indeed "more or less" success stories, but they still depend on the U.S. and Europe to sell stuff to, and we have been buying less and less. Deflation takes hold when debt has becomes the world's oxygen, and we are now drowning in it. No way in hell oil & natgas prices can increase in this kind of environment, except as another phony bubble.