I wasn’t going to write about the news coming out of Europe that they have a new plan to save Greece and, therefore, the European Union. But then I noticed in my e-mails that Larry Jackson at Political Realities had posted on the subject and I decided to take a look. Larry, as usual, always finds a way to get to the crux of any given issue. At the end of his post he asks a very important question:
So now, I ask a simple question. When will the cycle of debt and bailouts end and the era of financial responsibility begin? (emphasis added)
I have humbly decided to try to answer that question. But first let’s try to answer a different question. Has Greece been saved? In my opinion the answer is no, Greece has not been saved. I’ll explain.
An important part of Europe’s new plan is that the banks that are holding Greek bonds will be “forced to voluntarily” take a 50% haircut.(The so.called “voluntary” part of this deal is very important. Because it’s “voluntary”, the banks can not make claims on the insurance they but against credit-default, which would defeat the whole purpose of this plan.) Well Jeez, their debt has been cut in half. This should really help put Greece back on their feet, right? Indeed it is an excellent move in the right direction; BUT, it is not enough. According to Europe’s financial wizards, after forgiving 50% of the Greek debt, Greece will still have a debt equal to 120% of their GDP. Not good! And if you believe it is only 120% of their GDP, you probably also believe in “Fairy Godmothers”. But let’s take it at face value. The only way Greece can get out of the hole they dug for themselves with the hep of the banks is to stop most, if not all, of their sacred nanny programs and put the remaining Greeks that still have jobs in indentured servitude through taxes ,for God knows how many years, to pay back their bond holders the remaining 50% that they owe. IT AIN’T GOING TO HAPPEN! Greece will default again.
So, getting back to Larry’s question: ” When will the cycle of debt and bailouts end and the era of financial responsibility begin? ” Larry’s question has two parts to it. When will the cycle of debt and bailouts end ? And, when will the era of financial responsibility begin?
The answer to the first part of Larry’s question is easy to answer. The cycle of debt and bailouts will end when the credit bubble finally bursts. It must and it will burst. Be that in two months or two years, I do not know, but it will burst. In my opinion, there will come a world-wide economic meltdown.
The second part of Larry’s question is more difficult to answer. Let’s start by rephrasing the question. How will the world, and more importantly the US, emerge from the economic meltdown? I believe there are two possible scenarios.
The first and most likely scenario is one that benefits the bankers and allows to once again control the world’s monetary system. This is what we, of the tin foil hats, call the One World Order (OWO). This means one central bank for the world and one form of money for the world and a council (government) of world elitist to enforce a world-wide fiscal policy. I say this is the most likely scenario because there will be absolute chaos in the world and people will be in a state of panic and they will, in my opinion, grasp at the straw that the elitist will be offering them. Slowly this new OWO will achieve order out of the chaos. The price for this order is that we will lose most, if not all, of our freedoms and the concept of sovereign nations will be swept away.
But, what about the other scenario; the less likely scenario? This scenario would benefit freedom loving patriots. Under this scenario the people would reject the elitist plan for a OWO and opt instead for recognizing our past errors and demand that the nation(s) reboot and start over again with a clean slate; i.e., repudiation of all debt. Only in this way will nations be able to maintain their sovereignty and people reclaim their freedom. Slowly we could bring order out of the chaos. This would require a level of unity among people that I have not seen in my adult life, which is why I see this as the less likely scenario.
Well, that’s what I’m thinking. What are your thoughts?