Monday, 17 October 2011

By on October 17th, 2011 in Barbara, government, politics

09:27 – Someone emailed me yesterday to say that Europe wouldn’t have to inflate the euro because the EU €440 billion bailout fund could cover any shortfalls. Where to begin?

First, the ESFS €440 billion reserves aren’t really €440 billion. After accounting for monies already allocated to Greece, Ireland, and Portugal, they’re actually under €300 billion. And that only potentially. Second, the size of the fund is sufficient to cover only a small percentage–less than 10%–of at-risk EU sovereign debt. Third, this so-called fund exists only on paper. There aren’t stacks of gold bars in a vault somewhere. The EFSF has the right to issue bonds–to borrow, in other words–to make up that €440 billion total. And investors are not lending to Europe now, or for the foreseeable future. Even if they were, they sure wouldn’t be buying EFSF bonds. Why? Because those bonds are backed in large part by the sovereign economies they’re intended to bail out. It’s true. Spain and Italy, both on the brink of default, are major guarantors of the EFSF bonds. As are Belgium and France, both of which are little better off than Spain or Italy. None of these nations can pay their own bills, let alone someone else’s. That leaves the FANG nations, none of whom are willing to pay off the bad debt of the rest of the EU. So, while the EU authorities talk about building a bazooka to firewall Spain and Italy, what they have right now is barely a firecracker. And no prospect of getting anything bigger.

Barbara is recovering very well, better than anyone could have expected. She just showered by herself, using the walker frame in the shower for stability. Which, oddly, made me think of Steve Jobs, that supposed marketing genius. Barbara mentioned that she’d shaved her underarms and legs, which made me think of a true marketing genius, King Gillette. His primary market, men, was saturated, but Gillette wanted to sell more razor blades. So, in a stroke of genius, he somehow convinced American women that leg and underarm hair was undesirable. Were it not for his times, he’d probably also have gone after their pubic hair. To this day probably 98%+ of American women shave their legs and underarms, and no small number shave their pubic hair as well.

13:44 – I see that Greece is almost shut down, and this before the 2-day general strike that’s set for Wednesday and Thursday. The unions can protest and riot all they want, but that won’t change anything. Just to be clear, no one, and I mean no one, other than the Greeks themselves, is even slightly concerned about “saving” Greece. Greece is unsalvageable, and everyone is fully aware of that, including many Greeks.

The fundamental problem is that Greece is not even remotely competitive with first-world economies, including the northern tier euro nations. For the last decade or more, Greeks have enjoyed a standard of living similar to those of the citizens of Germany, Holland, and the other productive northern-tier nations, while producing only enough to enjoy half that standard of living. In reality, Greece is a third-world nation that’s been living as a first-world nation on borrowed money. So, assuming that Greece is able to maintain its current productivity, for the next ten years or more it’s going to have to get used to tightening its belt. And not just to half the previous level, but to more like a quarter. Once Greece defaults, it will be left to its own devices. And the unions will just have to get used to that.

9 Comments and discussion on "Monday, 17 October 2011"

  1. Chuck Waggoner says:

    How weird is this? Bill Goldsmith at Radio Paradise, has a contest going to give away a trip for two to a week’s vacation in — — — —

    wait for it


  2. Robert Bruce Thompson says:

    If I win, I’m going to take along my assault rifle and body armor. I’d probably have to make an amphibious landing anyway. I understand the airports are shut down, and even if they were open I wouldn’t want to depend on third-world ATCs. Also, I understand that Greek hospitals might as well be shut down. Many have few or no drugs. and AIDS has taken a big jump in Greece due to hospitals re-using needles without sterilizing them.

    Ah, forget it. As they say, first prize is one week in Greece; second prize is two weeks in Greece.

  3. Miles_Teg says:

    “…and AIDS has taken a big jump in Greece due to hospitals re-using needles without sterilizing them.”

    Oh hell, I thought only druggies and the old Soviet Union did such stupid things.

  4. Miles_Teg says:

    I really liked this article…

    A world held to ransom by the buggers in the banks

  5. eristicist says:

    I hear that it’s still quite common practice for dentists to reuse unsterilised needles in mainland China.

  6. Chad says:

    I hear that it’s still quite common practice for dentists to reuse unsterilised needles in mainland China.

    This isn’t surprising. When McDonald’s first opened in China, one of their biggest challenges was convincing their new Chinese employees that it was important to wash their hands after using the restroom before handling food. They just didn’t get it.

  7. Miles_Teg says:

    30 years ago when I did a Chinese cooking class the (Australian) instructor said it was considered perfectly acceptable in China for people to pluck things from a common plate/bowl with their chopsticks.

    Well, I guess there are less hygienic things you can do but that was one custom I never indulged in.

  8. Chad says:

    Restaurants in China are also known for scraping plates back into pot and re-serving it. They’ll also pour beverages back into the pitcher. Throwing it away is considered a huge waste and the food safety aspect doesn’t bother them as a culture, so why not?

    Go to your state’s or county’s website and look at the results from food safety inspections and under “marginal” and “failed” you will typically see there is a disproportionately large number of Asian restaurants.

    Still, I love me some good Chinese food. 🙂

  9. Robert Bruce Thompson says:

    When our friend Mary Chervenak ran around the world with the Blue Planet Run a few years ago, she and almost the entire team became seriously ill in China from food poisoning. To this day, she won’t eat Chinese food, even at restaurants with a 100% A rating.

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