Friday, July 22, 2011

Great news for German taxpayers!

So the big economic news of the day is that Greece is going to default, and that the ECB and the IMF are going to bail them out. The first part was a virtual certainty sooner or later, the second part less so.

European politicians being who they are, there is never a single problem for which the solution is not 'more powers for the EU, more centralised government!'. True to form, they've done it again:

Euro zone leaders were set to give their financial rescue fund sweeping new powers to prevent contagion and help Greece overcome its debt crisis, according to the draft conclusions of an emergency summit on Thursday.
The leaders were also set to promise a "Marshall Plan" of European public investment to help revive the Greek economy, in a deep recession due to draconian EU/IMF-imposed austerity."

Well that's great! Now that they've solved the problem with the level of debt (sort of), I'm sure the problem of the first derivative of debt (I.e. the ongoing Greek budget deficit that they still can't close, and keep getting riots whenever they try) will just take care of itself, right?

Ha ha ha! Yeeeeah. About that...

In much better news, Ireland, Portugal, Spain and Italy all solemnly announced that they really truly ruly aren't going to default as well:

In Brussels, the governments insisted that Greece was "a uniquely grave situation in the Euro area". In the draft agreement, the 17 leaders agreed that "all other euro countries solemnly reaffirm their inflexible determination" not to default.

And that's a guarantee you can take to the bank! Probably not a European bank, mind you, as they've got quite enough debt from these governments already, thanks very much, and are busy dusting off their 'How to respond to a bank run' manuals.

Let me translate all this for German taxpayers:

The good news is, you're going to have to pay for all those Greek civil servants!

The better news is, it's incredibly unlikely that this is the last time you're going to have to reach for your wallet.

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