February 16th, 2010

The Greek Financial Crisis

I often bitch and moan about the International Herald Tribune, but I have to say the way they've been covering the Greek financial crisis is awesome. It's fucking complex but also fascinating.

The basic deal is that the political party that used to run Greece figured the way to stay in power was to give the citizens everything they wanted regardless of cost including huge pensions, free health care, a shit ton of unemployment insurance and tons and tons of public sector jobs.

Their problem was that there wasn't anywhere near enough tax revenue to do so and they figured that if they tried to raise taxes they'd get voted out. Plus, the EU constitution forbid them from borrowing more than three percent of their GDP.

So, with the help of Wall Street banks they came up with an "interesting" way to get money without borrowing. See, they knew that because of term limits and stuff they'd be gone eventually. And, once they were out of office they didn't give a shit what would happen.

With this in mind they sold the future income of Greece to Goldman Sachs, Lehman and various other banks. For example they promised one bank all of their lottery income starting in 2015. Another bank got promised all the money from their revenue from their toll roads after 2020. Yet another bank got all of their airport landing fees after something like 2017.

Or course, the problem with this is that the lottery revenue is supposed to pay for their schools, tolls are supposed to pay for road upkeep and the landing fees were to keep the airport in shape. And, there still needs to be money to get this done so at some point there will have to be massive loans or some kind of bailout - but the politicians in 2007 knew that they would be retired and doing their own shit and figured they'd leave the new guys to beg for the cash from the EU.

What they didn't realize is that this would all come to light at the Worst Time Possible for the EU to consider bailing Greece out. Here's why: The Greek crisis is making the Euro weaker and France needs the Euro to get weaker.

You see, France makes a considerable amount of it's income in two ways:

1. Selling wine, cheese, perfume, clothes and mustard as exports.

2. Tourists descending on Paris.

When the Euro got really really strong people stopped buying French exports because they became hideously expensive. And, Americans, Canadians and other tourists stopped going to Paris for the same reason.

So, for Sarkozy to be able to generate enough jobs and tax revenue in France to do what he wants to do he has to get the Euro as low as possible. As long as Greece twists in the wind, this will happen, but as soon as they do something concrete for the Greeks the Euro will get stronger again and France will be fucked.

Then, there's the German thing. The Germans don't want a bailout of Greece either, but for different reasons. The Germans are serious moralists and it affronts their sense of decency that their citizens tax dollars could be used to help out a bunch of hairy Greeks. Remember, this is a country where people were angry at the cost of helping East Germany become part of Germany - and those people were their fucking cousins.

Plus, they figure that if they help out Greece it will be like feeding the bears at Yellowstone National Park - Portugal, Spain and Italy will then start asking for their own bailouts.

Therefore, Greece is fucked.

Happy Mardi Gras

Part of the Mardi Gras people ended up going past our apartment a few minutes ago.

Shortly after we heard them what seemed to be a cloud of tear gas though was something similar but not as strong (I've been tear gassed so I know what I speak. This was nose and stomach irritating but not the full shit that is tear gas) was shot at the revelers by cops.

The Mardis Gras people responded by picking up cars parked on the street and turning them perpendicular so that they blocked the street and the cop cars couldn't follow them. Then they turned over all the trash dumpsters.

Somehow I think this won't stop the cops and that more madness will ensue and I'm glad Rome Girl and I are safe at home.