Jim's Blog

If you know the the details of the bailout, your brain is being filled with useless misinformation. The important facts are the thirty thousand foot view:

That this bailout is much smaller than the previous bailouts.

That the previous bailouts had extremely harsh conditions that Greece was unable and unwilling to fulfill, and this bailout has even harsher conditions that Greece is even less able and even less willing to fulfill.

That this is not the first time that Greece has been asked to hand over the family silver as surety for a loan, and on previous occasions, the alleged family silver proved to contain no silver. Greece has a lengthy track record of yielding non asset assets to creditors.

Supposedly, if no agreement by Sunday, the ECB will stop funding Greece .

There have been a lot of final deadlines.

That which cannot go on forever will stop, but I would not bet on it stopping on Sunday.

Greece does not need austerity nor does it need stimulus. Greece does not need to remain in the Euro nor to exit the Euro. What Greece needs is a a massive reallocation of labor from luxuries and import consumption, to necessities and export production. Such labor flexibility could be accomplished by cutting taxes, dropping official wage floors and cutting the salaries of government employees, few of whom do anything remotely useful (“austerity”), or could be accomplished by retaining nominal wage floors and inflating them away. (Exit from the Euro plus “stimulus”)

In practice however Greece is likely to get the “austerity” of raising taxes that are far above the Laffer limit even further above the Laffer limit, and the “stimulus” of ever more governmental and quasi governmental patronage jobs. When neither measure, stimulus nor austerity, has the intended result, it will get further loans from countries less dysfunctional than Greece. These loans will gradually become stingier and stingier, and less and less able to maintain the illusion of first world normality.

Ending not with a bang, but with a whimper.

The trouble with socialism is that eventually you run out of other people’s money.

The level of economic freedom in Greece is fortieth out of forty three in the Eurozone.  It has been falling like a stone for some time.

The real Greek economic crisis has been happening since about 2002, though it was partially hidden by very large amounts of other people’s money until 2009.

Supposedly only twenty five percent of the workforce are unemployed, but the unemployed are vastly outnumbered by the steadily and rapidly rising “inactive”.  If a young man never gets a job, he is classified as “inactive” rather than unemployed.  And most young men never get a job.

In most of the world, the anticapitalist economic left has largely disappeared, replaced by the anti white, anti male, and anti heterosexual left.  In Greece however the anticapitalist left remains significant, so that in Greece the ever leftwards movement creates profound uncertainty in property rights.  Movement leftwards in Greece buggers the economy more than movement leftwards in the US.  If you invest, chances are you will lose your investment to a gang of thugs affiliated with a political party and protected by police and bureaucracy.  In the event that you don’t lose your investment to assorted thugs, in the event that you actually make a profit, tax rates are far, far above the Laffer limit, so you won’t get your money back in any reasonable time – and with uncertainty growing every day, a reasonable time is a shorter time every day.

The government program is simple.  They demand ever greater amounts of other people’s money, so that socialism can work.  Since the evil Greek capitalists are tapped out, that is evil German money.  Other people’s money is a human right, and their failure to get it is a violation of their human rights.

And the more they want German money, the more they cultivate hatred of the Germans.  Seventy seven percent of Greeks believe the economic crisis is a German plot to install the fourth Reich on Greeks.

If you are stealing Jewish money, or Greek capitalist money, then it is a useful tactic to hate them, demonize them, and blame them for everything.  Hating and demonizing Germans is unlikely to work as effectively.