What is happening in Greece, Portugal and Ireland will undoubtedly happen to countries all over the world. According to the world’s central bank, the Bank of International Settlements, or BIS , by the end of 2012, the debt level of the United States will likely be an amount equal to our countries entire gross production. That means the sum total amount of wealth produced in the USA will equal the public debt. That essentially is a “crash.”
Why did the Greece bailout fail? Well, who is helped most by bailouts? Investors. Mostly foreign investors who lent crazy money to countries like Greece all the while expecting that the EU would bail them out. This has happened time and time again, with the result being that the private sector debt was given over to the public debt without the public’s permission or knowledge. In Greece, which has a regressive, shrinking economy based on tourism, farming and construction, there isn’t any way for that country to grow itself out of debt, ever. Another problem for Greece is that other countries in the EU, like Austria, who are probably thinking they’re smart, are now beginning to refuse to pay for Greece’s investor-created financial meltdown. When countries refuse to honor a financial commitment, the cracks are beginning to show, although British Chancellor George Osborne apparently has no problems asking his countrymen for billions of pounds to financially support the Land of Plato. I didn’t know the Brits had that kind of money laying around. The Germans, who are now certainly regretting their donation, threw over 22 billion euros last year at the Greeks, who are now hinting they may want out of the EU and default on their loans. How’s that for gratitude?
We’ve seen this scenario play out before: the lowest-paid workers will feel the most pain and the wealthy criminals who created the mess in the first place will still order tall drinks and live comfortable lives. The contagion of Greece’s economic problems will spread to other countries and money will disappear into a fnancial black hole never to be seen again. The IMF has admitted that there is danger for the contagion of debt to spread to other EU countries.
What is playing out, is the countries are spending debt to fight debt. I guess we don’t realize is when that happens that the expected outcome should be more debt. It’s a circular, negative equation where corporations and countries can go irresponsibly into debt and get bailed out. This magically disappearing act will repeat until Capitalism reaches the terminal stage. Unfortunately, people will have to be severely harmed before they will take action.
(Article first published as The Greece Bailout Failure Covers an Even Deeper Problem – The Global Debt Bomb! on Technorati).