The Death of Capitalism apologizes to the late Senator Everett Dirksen who it turns out may or may not have actually said those words that are so often attributed to him, but you have to wonder just what he’d have made of the super-sized public bailouts of today.
The latest instalment of course is a near-trillion dollar “backstop” fund announced by the Euro-zone countries in an attempt to deal with the fallout of the debt issues of Greece and the potential for a “contagion” that would sideswipe their unified currency and project for an economically and politically united Europe.
Amid all the hyperbole about those shiftless Hellenic socialists and their gold-plated social programs that led the country to the brink of bankruptcy, however, I think it’s important to note that this whole episode is fundamentally a failure of capitalism, not “socialism”… whatever that means these days.
To understand this we have to take a quick back-of-the-envelope look at what actually happened. Which appears to be that the main centre-right party colluded with the largest investment bank in the world to pull an Enron and dump the country’s debts off the books using a bunch of fishy instruments that made it impossible to see what was actually going on with the country’s finances. That allowed Greece to qualify for membership in the European shared currency.
Make no mistake, like any trade agreement or currency union, it was definitely the country’s business and political class that was behind this move, not the average Greek citizen. Now taxpayers across the Eurozone find themselves on the hook to backstop these fishy business deals and it’s beginning to look a lot like austerity measures (and the accompanying street riots) are the order of business for the foreseeable future as – irony of ironies – Greece’s main left-of-centre party cleans up the mess. Can someone please explain to me again exactly why the right always gets to claim to be better at running an economy?
And you’d better believe this entire exercise is about bailing out a bunch of European bankers and their interconnected web of debt who made lousy business decisions without doing proper due diligence — though in fairness one of their own was gaming the books, making that a tall order.
But the crisis seems to be contained – for now. But given the success of central bankers and their ilk in the past when it comes to forecasting containment you can colour me skeptical. More likely they’ve just papered over the problem for a few more months, and by kicking the can a bit further down the road, thus making the problem even bigger when the day of reckoning finally comes. My gut instinct tells me that when it does, that 1000 point drop in the Dow Jones Industrial Average is going to look like a bit of light turbulence.
And finally… a brief explanation for my prolonged absence…
As I noted in one of my last posts, about two months ago, I managed to break an ankle that required some surgery. Well, my own natural clumsiness managed to compound an already bad situation.
About three or four days after my release I wound up falling off my crutches and severing the quad tendon from the kneecap on my other leg, thus rendering me a paperweight for much of the past two months — albeit a mouthy paperweight with no shortage of opinions.
I wound up going through another even more serious surgery and spending nearly a month incommunicado in hospital confined to either a bed or a wheelchair while things healed. I’m back home now, hobbling around on a walker, as things rehab, and I’m really looking forward to getting back to making regular contributions again.