Thursday :: Jul 9, 2015

Why Shouldn't America Bail Out Greece?

by Deacon Blues

Regardless of who you think is ultimately at fault for what's been going on between the European Union, its central banks, and Greece, a catastrophe is about to unfold.

Angela Merkel doesn't have the political latitude to allow the necessary debt forgiveness that Greece needs to move ahead with necessary reforms. The finance ministers want Greece to get religion and face the music. And the central bankers made the loans knowing that there wasn't a political structure and support inside Greece or even within the EU to balance needed reforms with growing the Grecian economy. In fact, the whole IMF program for Greece was doomed from the start because it demanded too much from a declining economy without also enforcing debt reductions.

Even with a vote this weekend on a new proposal to the bankers, once Greece misses its next repayment date, the European Central Bank will declare the country in default and demand a corrective action plan that Greece cannot and will not provide. Actual cash in the country has already dried up, the economy has already frozen up, and real people may soon start starving, all while central bankers complain that they aren't getting paid back for loans they made with eyes wide open.

And once Greece gets to that point, it ditches the Euro to print local money and scrip, causing hyperinflation. It eventually leaves NATO, and walks right into the arms of Vladimir Putin, who will only too happily loan Greece the short-term funds it needs in exchange for a NATO-breaking alignment and a new naval base on the Mediterranean. Think it won't happen? Think again.

So given the German political inability to be flexible, why shouldn't the US step in and provide the short term guarantees for both the ECB and Greece to keep their economy going while we work with them over the next 6-12 months on economic restructuring, and getting the benefits of such good deeds ourselves like our own new base for a newly reestablished Twelfth Fleet? Greece needs the restructuring, and needs the essential investment from the US, while we need the military presence in that region for many reasons.

Just a thought.

Deacon Blues :: 6:00 PM :: Comments (1) :: TrackBack (0) :: Digg It!