The Grasshoppers

I know that John Hinderaker is generally my go-to guy at the Powerline blog, but Paul Mirengoff has a very pity entry on the debt debacle in Greece ... see: Greek Farce Explained. In this posting, Paul quotes a lot of the inside skinny about how the Greek poobahs misplayed their hands at the financing negotiations with the rest of the European Economic Community (EEC). Talk about the JV playing against the L.A. Lakers. This arrogant bunch of lefties from Athens carried with them there the grasshopper's attitude that the world owed them a living. They may have learned a very hard lesson ... which I don't think is over yet.

I myself have a few comments on these Mirengoff revelations:

- How can Finland be made to adsorb such of heavy burden of this Greek indebtedness? This posting reveals that this country is being asked to pay out 10% of its annual budget and 2.5% of its GDP to hold Greece's head above water. This can't be fair. If the rest of the EEC ponied up the same relative amounts, I suspect that this would cover Greece's shortfall many times over.

- How can the EEC or the International Monetary Fund (IMF) lend Greece any more money when they know that they are not going to repay what has already been lent? Yes I know that the formation of the Euro has benefited Northern Europe, mainly Germany, greatly ... GNP growth-wise. But nevertheless, if you have to lend someone money to buy your products ... and you know that this debt will never be repaid ... this seems a silly commercial strategy.

- The U.S. generally has assumed an attitude that all this European economic kerfuffle does not affect us. But we forget that we contribute something like 18% to the IMF funding ... so what the IMF loses, we also partly lose.

Isn't rather ironic that present-day Greeks seem to have forgotten Aesop's lesson from "The Grasshopper and the Ant?"

In Spades

The European stock markets are up substantially this morning for two reason: one, the hope for a Greek debt settlement and two, the fact that the Shanghai stock market is up over 10% in the last two days ... both reasons being baloney juice. Whatever the Greek terms, it is clear that the vast majority of its debts will never be repaid and a capitulation by Germany and the EEC will now only encourage other debtor nations (Spain, Portugal, Italy) to swing left and emulate Greece in petulant defiance of their debt obligations.

And insofar as the much bigger issue, China, it is abundantly clear that the current Shanghai stock market is now a state-run artifice. The Beijing government has stepped into this "free market" with both feet ... decreeing that big investors not sell major investments for six months, threatening short sellers with prison, stopping trading on huge numbers of listed stocks, forbidding new IPOs, forcing banks and insurance companies to buy stocks, etc. ... see: The Economist Story. Such government manipulation of prices cannot bode well for the future of this trading venue ... and clearly is no reason for any bullish sentiment in the rest of the world.

Even that perennial bull, Jim Cramer, is chary about these developments and is offering constant veiled warnings about the state of the world's stock markets. I concur ... in spades.

2013 Predictions

- At least one country will leave the European Economic Comm.

- Oil and gas fracking will be outlawed by the E.P.A

- Jimmy Carter will attend Hugo Chavez’s funeral … or visa versa

- Massive student-loan meltdown ...  U.S. taxpayers foot the bill

- China will annex more territory … possibly part of Mongolia

- U.S. economy will fall into another recession

 - Iran and Egypt form a pan-Islamic alliance

- Hillary Clinton will not remember Benghazi in front of Congress

- Iran gets atom bomb … U.S. and Israel do nothing militarily

- It’s Denver vs. San Francisco in Super Bowl ... Denver wins

- Inflation finally bites … up 5%+

- At least one state will go bankrupt ... U.S. taxpayers foot the bill

International Monetary F...ing

Christine Lagarde, the head of the IMF (International Monetary Fund), now estimates that, in order to fully protect the European Economic Community (EEC) from cascading debt default, it will cost the IMF €3 trillion (see Lagarde Unloads).  The IMF now has about €300 billion in available funds which means that it is €2.7 trillion short of this needed bailout reserve.  The question then becomes ... what will it cost the United States to put this gigantic finger in the financial dike?  Well the Wall Street Journal states the our additional share of this shortfall would be at least 17.1% to 19% ... or even possibly more (read the: WSJ Article).

This translates into a $618 billion to $687 billion reach into the (empty) U.S. piggy bank to bail out Europe!  Wow! This is more than five times the 2008-inflation-adjusted cost of the post-World-War-II Marshall plan (see: Bailout Costs).

The operational idea behind the IMF seems to be -- "from each according to its ability, to each according to its need."  Hmmm, what does this sound like?  (By the bye, the world's second largest economy, China's current related IMF assessment percentage is ... I think ... below 4% ... and it may be 0% ... the IMF is not very transparent about these things.)