Thursday, October 6, 2011

One (or Some) of Us Is (Are) Not Like the Others!

According to Michael Lewis' new book, Boomerang, here's what happened in Europe.  The Germans ran a good economy.  Neither the government nor the financial institutions borrowed what they couldn't repay.

The Greeks, on the other hand, ran a bad economy.  They built a railroad, for example, whose revenues are around 100 million Euros, a payroll of 400 million Euros and other expenses of 300 million Euros or so.  To finance all this, Greece borrowed enormous sums of money from banks, mostly in Europe.  Now, Greece can't pay it back.

Which means the banks they borrowed it from are stuck big time.  To keep the banks from going under, The EU has to get money from its members whose economies are good and give it to countries, like Greece, whose economies stink.

Thus, the question: If you were a German, would you like to have your taxes raised to bail out Greece? 

And if your answer is No, which it certainly ought to be, then why aren't you on the side of Occupying Wall Street?

America's big lenders made a whole lot of bad loans, and to preserve the country's--actually the world's--financial system, the U.S. Treasury came up with TARP, which many thought would cost as much as $300 billion.  As it happens, it won't, because the banks are paying most of it back.

The U.S. is a long way from being out of the woods, yet, and the state of a couple of the biggies still isn't great.  The American taxpayer may be called on again.

But still.  If you lost your job because of the financial meltdown, or you graduated from college with student loans in five and six figures and you can't get a job because of the crisis, would you think bailing out Wall Street is the right thing to do?

1 comment:

  1. Ten years ago ( the last time I did the Turkey-Greece border run for a visa), the Greek trains were significantly nicer than the Turkish ones-- fast and silent with padded seats. Now I know why.

    Except sometimes they inexplicably charged you an extra (and unannounced until you got there) fee ("supplemento," in Euros, and only in summer when the world was ripe with foreign tourists) to board the super-nice Greek trains.

    Funnily enough, if you asked why this fee wasn't charged in the first place, they'd look askance and shrug with their hands up just like Turks do, in the way that means, "How could I possibly know anything about this, and how could I possibly change it?". And then they'd pretend they didn't speak Turkish or English, except everyone knows border Greeks usually speak quite a lot of Turkish...

    If only they had been bearing gifts, I'd have known what to do.