Is Greece a European Problem or is Europe a Greek Problem?

Putting aside the debate on why the Greeks got into the “toilet” economy they have, I like to focus on the “how” and "how".  That is, HOW they got in it and HOW they can get out of it and put their economy back on the growth curve.

The simple answer to how they got IN IT is that the Europeans were more than willing to lend them cheap money knowingly Greece couldn't afford.  The simple answer to the HOW THEY GET OUT OF IT is... they CAN’T. It is impossible. Regardless of what kind of demands and austerity measures the Germans and French try to impose on these people, mathematically will not work. I do not hold a degree in economics but I know that 1+1 comes up as 2 no matter how you spin it. Greece does not have a “big item” industrial base; in fact Greece hardly has any industrial base at all. Before they can compete in the global market they have to set up new industries which can produce more than olives and ouzo. So unless they develop a huge and modern multi-face industry and do it quickly…they are fucked…economically and financially…fucked. The bottomless money pit just found its bottom.

Now, to the issue at hand, which is the colossal Greek debt choking the country’s financial stability and why the so called “bail-out” will not work.

First and foremost you have to understand that if you owe a dollar and can't afford to repay it but you borrow two more dollars...you are now so deep in shit it is up to your eyebrows. Second you have to understand that the so called Greek “bail-out” is not a “good will gesture” or "gift" from Europe to Greece. It’s a fucking “choke hold” loan…that one way or another has to be repaid and be repaid with interest. It is not like the money Goldman Sachs got from Obama at 0% interest.

Think of this example for a moment. Let us assume that for whatever reason, you got yourself into a financial mess and had to borrow $1000.00 from international investors/creditors and other financial vultures. The $1000.00 loan plus the interest is now due. Unfortunately, you do not have the funds to honor your debt obligations - you are running a deficit. You and your creditors are now faced with the following dilemma. As the debtor you MUST come up with a $1000.00 plus interest to pay your creditors and they, as creditors, may have to take legal action against you if you don’t honor the contract of repayment. Given the fact that you are broke, any action on their part will force you into default and that’s not good for you or them. Stay with me on this one. It’s not nuclear physics but it’s just as interesting.

You, being the dumb ass you are [if you weren’t a dumb ass you would not have borrowed the $1000 you knew you couldn’t afford to pay in the first place], you go to the vultures and ask to borrow $5000.00 more. They are reluctant to do that, so you regretfully suggest to them that unless they lend you the funds you need, you will default and take them down with you. They of course being the greedy dumb asses they are, [if they weren’t dumb asses they would not have loaned you the original $$$ in the first place]; give you the additional $5000.00, in the hope that somehow, someday they will be able to retrieve their investment with interest.

You take the $5000.00 and clear some of your debts thinking you bought yourself some time to come up with a more sustainable solution next time. Are you still with me? Of course you are. What has just happened is that your CREDITORS by giving you the $5000.00 and YOU the debtor by taking it, have made your deficit and their exposure to it, five times bigger than the original $1000.00 you couldn’t afford the first time. Fast forwarding this tragedy to some future point in time, you find yourself in the same situation and have to go through the same procedures again and again and again needing more money each time. In fact, by lending you the funds the first time, these creditors have turned you into a perpetual debtor and themselves into your own perpetual “money lenders”…a situation which is unsustainable.

The original debt was $1000.00. You borrowed an additional $5000.00, so you now owe 6000.00. You use some of the new money to pay back the original $1000.00 dollar loan plus interest but you are still left with a deficit five times the size of the original debt. Are you still with me?

Common sense suggests that if you couldn’t afford to repay the $1000.00 debt you will most certainly not be able to repay a $5000.00 debt. This is not even math…it’s grade two arithmetic. Unfortunately, this vicious cycle will keep repeating itself until YOU decide to default and free yourself from all obligations and the CREDITORS decide to cut their losses and run.   That my friends is the current situation Greece finds herself in with the Eurozone. This perpetual borrowing/lending affair will turn from a European financial tremor into a Global mega earthquake. If Greece does not default and the Eurozone countries do not stop lending Greece money she can’t afford to repay, the European economy will collapse and will take the global economy down with it. It’s really that simple. I don’t give a rat’s ass what these big shot economists and politicians are telling you. You can’t treat cancer with extra strength Tylenol. Both Greece and the Eurozone have to face the reality that their long term relationship should have been a one-night-stand and therefore the marriage must end.

So in the final analysis, the answer to the “how” the Greeks can get out of this mess and get back to growth - is to totally and unconditionally DEFAULT and get out of the Eurozone. You can’t have a healthy balanced economy when you are selling the Germans and the French olives and oranges and they are selling you Mercedes and Mirage jets. It ain’t gonna fucking work! Not now, not tomorrow, not ever.

Again This Is Not News...It's Capitalism In Decline!

Signing Off...Dr. Politikong