Small piece in the Wall St Journal today. The Greeks and the Euro's have reached a "preliminary agreement" on the austerity measures the Greeks must adopt in order to qualify for E5 billion handout next month. The Euro's keep insisting upon reduction of Greek government workers, and pension payments, and better tax collection. At one time 25% of the population of Greece was drawing pay from the Greek government. And humongous numbers of people were drawing pensions. Every time the Greeks make a move, or even a whisper in the papers, about accepting Euro austerity demands, they get riots in the streets.
The E5 billion is down from the old days. In past years the Greek bailouts were much higher, say E50 billion. The Euros think the money will let the Greeks make the payments due on Euro bonds and loans. Let's hope that works out. The Greeks are having trouble making payroll, and so Euro bail out money might be diverted into other things.
We think the Euro's are doing the handouts to prevent the Greeks from defaulting on their loans, which would impose serious losses on the Euro banks stupid enough to still be holding any Greek debt. So the idea is to dole out money to the Greeks to use to pay off their debts.
Smarter would be to tell the Greeks to suck it up. No more bailouts. Go ahead and default. You won't be able to borrow a plugged nickel anywhere in the world, and you will have to balance your budget.
Far as I can see, the bailouts just allow the Greeks to spend other people's money for no good reason.
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