Re: 2-Nov-11 WV-Euro in crisis again, as Greece melts down
Posted: Thu Nov 03, 2011 4:29 pm
Europe, so far, has rejected the United States model of the government ( in the form of the United States Federal Reservere ) just printing Trillions of new U.S. dollars out of thin air and the United States government ( in the form of the United States Federal Reserve Bank ) using Trillions of printed dollars to buy the United States' own bonds on the secondary Market.
Europe is instead attempting a muti-track approach:
1. Pretend that a democratic country can continue growing with a government debt load of between 120% and 160% of GDP.
2. Pretend that such growth can continue while the country introduces sever cuts in government spending at a time when a huge portion of the economy is government spending, and,
3. Pretend that such growth can continue while the country imposes new taxes on it's businesses and citizens to pay interest on the government debt, and,
4. Force the banks to accept a "voluntary" 50% loss on all debts they are owed by the country in debt crisis.
5. Tax countries not yet in a debt crisis to provide partial compensation to the banks and the citizens of the country in debt crisis for the losses they are suffering as a result of tracks 1 through 4.
The jury is still out on both the United States and European plans to solve their debt crisis.
Europe is instead attempting a muti-track approach:
1. Pretend that a democratic country can continue growing with a government debt load of between 120% and 160% of GDP.
2. Pretend that such growth can continue while the country introduces sever cuts in government spending at a time when a huge portion of the economy is government spending, and,
3. Pretend that such growth can continue while the country imposes new taxes on it's businesses and citizens to pay interest on the government debt, and,
4. Force the banks to accept a "voluntary" 50% loss on all debts they are owed by the country in debt crisis.
5. Tax countries not yet in a debt crisis to provide partial compensation to the banks and the citizens of the country in debt crisis for the losses they are suffering as a result of tracks 1 through 4.
The jury is still out on both the United States and European plans to solve their debt crisis.