EU Throws Cash Down A Greek Commode

When is Germany and the other major EU countries going to wake up to the fact that they’re never going to get their money back.

Didn't this sort of thing already happen during the post WWI era with U.S. Stock investment in Germany that lead to the Wall Street Crash of 1929 and triggered the first Great Depression? Does this ring a bell with anybody?

As the story goes, the stock investments were supposed to build factories and office buildings in Germany to restore the nation and deliver a return on investment. Like in the old Broken Window theory of economics, Germany needed everything. But little did the investors know that the money instead went to paying France the formidable war reparations it was awarded in the Armistice. 

In this fashion, none of the money that was pouring into Greece is going to where it is supposed to go either.

The smokescreen being thrown up by the latest Greek government is not unlike the smokescreen that was thrown up by the last Greek government. It’s a Dog and Pony Show, just a put-on for the rubes meant to keep the status quo when everyone knows it can’t go on.

Nobody wants to throw in the towel on the EU when its intrinsic flaws were evident from the very beginning. The EU can’t strangle the shit out of another EU country by taxing them back to the Stone Age like our government in theses United States can do and has been doing.  Also if an EU country goes into debt and like Greece, MASSIVE debt, in a currency they can’t print, then there is no economic force, like inflating the currency, that can be pulled without effecting the rest of the EU nations.They’re just stuck with the debt and THAT effects the other EU nations. 

So Germany ends up doing what the U.S. did in the 1980s with its stupid loans to South America: They start lending MORE money to the debtor nations so that they can pay the interest on the U.S. loan debt. But instead of banks laying out case, Germany and France are going to the taxpayer well and that is a BAD HABIT.

At least the U.S. banks did this to buy time to eventually write down and charge off the losses but they still had to take the loss. Drawing out the write off only softened the blow to investors. What is the EU going to do? It doesn’t look like this is their plan.

Hello, EU, Greece has NO INTENTION of paying back the money! 

They are still in some weird War Mentality with Germany where they are trying to justify their non-compliance with their EU monetary responsibilities as an act of defiance for being flattened by Germany in WWII. As if the EU put a gun to the heads of Greek politicians when they signed their ridiculous retirement and pension agreements, giving their massive and massively wasteful Public Sector the right to a job and a right to retire from that job at, what, 55 to 58 years old? And come on, they only SAY they are going to start collecting property taxes, they aren't actually going to DO IT!

And in this case it’s the German taxpayer who really suffers and the working class of France and the people who bust their asses at real jobs who see their tax money being funneled to the unworthy, the unmutable and the unwilling to cooperate with the plan. Is this the result of a long simmering dislike based on the past or is this merely an excuse by a desperate nation that is living the Ant and the Cricket Aesop Fable? It looks like the later but the result will be the same.

So why should the EU throw any more money at Greece? Greece is going to just waste it and laugh. Of course they will only laugh long enough til they realize they aren’t going to get any more.

But that is Nationalism for you. People are very protective of their system. Even if it’s shit, it’s still THEIR shit system and they aren’t going to let France or Germany dictate the terms even if it was they themselves that Screwed the Pooch on their finances. What do they care? The sun and ocean is still warm and the olives are in season. The tourists will still come and at least they’ll make SOMETHING. Hell, they’re not paying any taxes so the overhead is low.

It used to be that the U.S. had a sense of Nationalism and pride like that. Right now there are too many American Citizens who think the U.S. is the problem nation of the world. As a percentage there seems to be fewer people who believe in the old American ideals of self-sufficiency, self-reliance and the advantages of hard work in a Meritocracy. They feel the people who have should give all to those that don’t  regardless of the circumstances and that if you have something, then you must have taken it from someone else and so corrections must be implemented. Any this is how a nation ends up when too many people feel that way. This sort of Wrong Thinking can destroy everything. And here we are.  

But that’s what you get when a nation lets in millions of undocumented and therefore illegal foreign nationals. They walked right in without going through the rigors of a legal naturalized citizen. They did not have to learn about what it means to be an American Citizen. They didn't have to do anything but climb a fence or crawl through a tunnel and they get what the people who struggled to follow the rules get so becoming an American Citizen no longer carries any weight. It’s really not that important to anybody, especially our government. What difference does it make at this point? And those not vested in the process will only choose to ignore it. They already have.

So the experiment that is the EU, much like the experiment that was the CCCP, will yield to the reality of Market Forces and come apart at the seams. Either that they’ll just limp on into the future and collapse later. Hopefully it won’t take 79 years of misery like the Soviet Union.

Perhaps these things just have to run their course. 

Government Spending Does Not Grow the Economy

I don’t know where the disconnect is. Is it just politics and the people who are the recipients of government money just pretend they believe it or are people just stupid to begin with and join the “destruction leads to economic success” crowd.

Government does not produce anything for sale. They get their money mostly from taxes, income taxes, excise taxes, sales tax and other administrative fees. These moneys come from the taxpayer< people who work for private business and produce goods and provide services> for which they are paid by the consumer> with this so far?

When the government takes these moneys in they then transfer these funds to their prospective budgets and agencies that spend it on what they do, like the USADA, the FBI, the FDA and the money is also allocated to Medicare, SSI and states in the form of Federal Highway Funds.

All this moving of funds takes people, government employees, who handle the accounting, the money transfers and keeps track of the money coming in from their various sources. In private enterprise we call these people “Overhead”. These people cost money in pay and benefits. They only exist to handle the tax money coming in and there are legions of them from local IRS agents, town collectors, state collectors to the federal IRS. This process carries a price tag.

This is why when either State or Federal agencies spend taxpayer money, they put out much less than they take in. This is in the form of the previously mentioned overhead. The money handling  costs reduce what the government takes in.

A great example of government spending in action is Boston’s Central Artery/Tunnel Project, aka The Big Dig, a federal highway’s project that when 9 years beyond it’s 1998 completion date and over ran its budget from a projected $2.8 Billion to an incredible $14.8 Billion and will end up costing a total of $21 Billion once the bonds floated have been paid for. Taxes have had to go up to pay for this massive expenditure. The Feds only contrubuted $7 Billion to the project meaning the State of Massachusetts has to pay the other half. And it was a lousy job. The tunnel leaks like a sive and the ceiling panels are suspect. And they didn'even make the road wider.

Government too often starts to look for a place to put a bridge rather than where a bridge is needed. So when someone says the government creates jobs I have to laugh out loud. The government does not create jobs. Companies create jobs. The only difference is when the government takes money out of the private sector to create a jobs, we only see those jobs. We don't see the jobs, the buildings  and the opportunities that money would have created because it was never allowed to happen.

These private sector jobs would also have taken place without the overhead that government is stuck with as a matter of course. This is why a government job is not a net gain to the economy. These jobs don’t grow the economy because they go to non-producing jobs that provide no measurable return to the economy. Oh, the government workers put money back into the economy when they spend it but as a whole, less money is going back into the economy than was taken. This is a loss in economic growth, not a gain. There are too many people handling the process for there to be any cost effectiveness to their public works.  This is not a political thing, it is an accounting thing. It’s just the math of the situation. The more people involved in the process, the less that comes out of it. Everyone gets a check but not every job produces growth.
Growth only occurs in the private sector where the efficiencies of competition and the marketplace determine success and expansion. If you make something people are willing to buy voluntarily, you will grow the economy. Governent didn't invent Microsoft or Samsung.

The latest outright lie I’ve heard was that the U.S. economy shrank mostly because of government cuts. What didn’t the government produce that they had to cut back on other than killing machines perhaps? No, the nation does not run on government spending, the nation runs on private sector production and that is something that the government itself is killing because of higher taxes and increased regulations. This is squeezing the consumer and when people stop consuming, the economy shrinks.

This is not a surprise to anyone where they can see government growing and taking resources out of the economy and causing producers to produce less since they can’t sell what they’re making because consumers are buying less since there is less in their pockets.

What did they think was going to happen?