Posted on 02/11/2010 11:23:15 AM PST by SeekAndFind
Pigs are dispensable; or, at least, so says the Ministry of Defence, which yesterday owned up to detonating more than 100 of the poor sow-and-sows in its bid to improve the lot of soldiers blasted by roadside bombs in Iraq and Afghanistan. It is enlightened attitude that cannot be said to be shared by our European neighbours, who were last night on the brink of endorsing the biggest pig-rescue mission in history.
Of course, in this case, the PIGS in question are not animals but countries – or, to be more precise, Portugal, Italy, Greece and Spain. In crisis talks in Brussels today, European leaders will discuss how to prevent Greece from imploding, and tipping its Mediterranean neighbours over the financial precipice. To the great horror of their more sensible Teutonic counterparts, these countries surfed on the tide of cheap credit provided by euro membership and generated a debt bubble so enormous that it threatens to take down their economies.
Investors are terrified that those at the sharpest end – in particular, the Greeks – will fail to honour their debts, and are demanding an ever-higher interest rate from them. If such a rate is imposed, Greece could soon, like every debt recidivist, find itself so hopelessly mired in interest payments that it will no longer hope to escape from its debt. It may already be there.
So far, so familiar. Greece is not the first and will not be the last country to face fiscal oblivion during the crisis. But what sets Greece and its porcine neighbours apart from, for instance, this sceptred, indebted isle, is that they are part of the euro. Should one of them default, the very act could bring the entire currency down, plunging the world economy's most important continent into financial and economic chaos.
(Excerpt) Read more at telegraph.co.uk ...
ping
GIPS is probably more appropriate.
The “I” is for BOTH Ireland and Italy.
Ireland is in trouble because it had to borrow a lot of money to bail out the banking system when it crashed and burned. The other Club Med states are just undisciplined economic losers; although to be fair Italy is like that because of the southern part.
It’s spelled PIIGS here, and yes, if Club Med goes down, Ireland is likely to have problems. Much of their success was propelled by EU development money.
And yes, as I called in the late 1990s, a monetary union without federal oversight of the spending levels of the member states is not sustainable.
PIIGS ....and Ireland is in worse shape than Italy. The country went crazy during the boom years, and now the piper needs to be paid. They do have low corporate taxes, but that alone was not sufficient to mitigate the immense fiscal stupidity. One good name for Ireland is the Dubai of Europe
It seems to me that the whole idea of the Euro has a fundamental flaw that is just now being exposed. That flaw is the idea that you can have a universal currency across several totally independent political entities that are able to operate without any real fiscal constraints. This inevitably results in some countries going so deep into debt that they reach out for the standard solution to their problem: inflate the currency and borrow more of the stuff to meet your debt obligation. That works (well sort of in the short run) when you are a COUNTRY WITH YOUR OWN CURRENCY. It doesn't work at all when you are a member of a group of nations where many if not most have very little interest in inflating the currency, at least at the rate that it will take to bail out Greece and Spain.
The creation of the Euro had nothing to do with economics. It was all about the Euro elite taking away sovereignity from the member states. Europe was and is a poor candidate for a monetary union.
Ireland may have a very low corporate tax rate, but from what I understand the country has been hit hard by the migration of businesses and whole industries to Eastern Europe.
Good post
One hundred years later, as my friend pointed out, it sure looks like they've achieved this.
I believe you are right and we are about to find out.
For the reasons I gave, it seems to me to be impossible for the other members of the European Union to let Greece and/or Spain fail. They could, of course, just continue pouring money down Greek and Spanish rat holes. But if not, there is only one alternative: take fiscal control of the Greek and Spanish government spending. That is, of course, the ultimate sacrifice of sovereignty. Will it happen? It will be interesting to see. The Euro-weenies have two bad choices, the rat hole approach or fiscal invasion of Greece and Spain. Which will they choose? Get out the popcorn.
More like the Frogs running the show with the Krauts paying the bills.
Hmmm. Frogs legs with a side of saurkraut. I like both but never really thought of them together with the same meal.
Laboratories for socialism. The disciplined ones like Germany and Japan will fail too, only at a slower pace. The demographics alone are setting up an epic fail.
I predicted this when the EU was formed back in the 90’s. Marrying disparate economies with wild ranges in financial discipline will not work.
Its amazing that it went through.. I remember my economics prof in 1997 was telling us about this issue in exact detail, and she was an unreformed Keynesian!
C19fan,
Funny you should mention Club Med.
I have a sailboat I moor at Club Med in Port St. Lucie, Fl.
Great dock and set up.
90% of the time the winds come out of the southe east and I go in to the dock that faces to the south east. ( makes it easy to get in and out) BUT,
Club Med is a run down, crappy place with a bunch of flash that I would not pay Holiday Inn prices to stay at.
Lots of french folk come here during the winter. Great.
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