World News: Greek Bailout and Socialism
An Amusing Analogy of the Greek Bailout
⇐Greece in ruins
The explanation of the Greek bailout, how it works. “It’s a slow day in a little Greek Village. The rain’s beating down; streets deserted. Times are tough, everybody’s in debt and everybody lives on credit. On this particular day a rich German tourist driving through the village, stops at the local hotel and lays a €100 note on the desk, telling the hotel owner he wants to inspect the rooms upstairs in order to pick one to spend the night.
“The owner gives him some keys and, as soon as the visitor has walked upstairs, the hotelier grabs the €100 note and runs next door to pay his debt to the butcher. The butcher takes the €100 note and runs down the street to repay his debt to the pig farmer. The pig farmer takes the €100 note and heads off to pay his bill at the supplier of feed and fuel. The guy at the Farmers’ Co-op takes the €100 note and runs to pay his drinks bill at the taverna.
“The [tavern owner] slips the money along to the local prostitute drinking at the bar, who has also been facing hard times and has had to offer him ‘services’ on credit. The prostitute then rushes to the hotel and pays off her room bill to the hotel owner with the €100 note. The hotel proprietor then places the €100 note back on the counter so the rich traveler will not suspect anything. At that moment, the traveler comes down the stairs, picks up the €100 note, states the rooms are not satisfactory, pockets the money and leaves town. No one produced anything.
“No one earned anything. However, the whole village is now out of debt and looking to the future with a lot more optimism. And that…is how the bailout package works.” (chuckles) So whether this… It’s clever. Some of these things that go around are clever. But it does come on a day where Greek bailout’s been announced and the market’s going gangbusters here, at least it was before the program started. Yep, it’s 2:03 and it’s regaining a lot of ground it lost yesterday and the day before. And it’s all because Angela Merkel has caved and agreed to bail Greece out again. This is a pretty good illustration of how it all works.
Nobody produces anything.
Nobody earns anything.
Yet another bailout.
It’s just a way to cancel out debt that really hasn’t been cancelled, and nobody’s better or worse off afterwards. Except, see, that’s the rub, because the Germans are going to be worse off. They’re throwing good money after bad. Do you know what the Greek debt ratio is to GDP? The Greek debt ratio to GDP is 180%, meaning that whatever the Greek gross domestic product is, their debt is 180% of it. It is such now that it has been admitted that Greece will never pay that back. They will never be able to pay that back.
So a bailout structure scheme, what have you, was concocted to effectively, on paper… No, no, specifically not on paper! It’s psychologically, take everybody back to zero. It’s one of the biggest fool’s errands that you can ever see, and I have no doubt that Obama put pressure on Merkel for this. I have no doubt whatsoever. Obama can’t sit there and let one of the most flagrantly out of control examples of socialism go down the tubes.