For everyone’s information the 2nd world war ended 66 years ago. Angela Merkel was born in 1954 which by my calculations is 57 years ago. I only say that because I sense that some of the hysterical comments concerning Germany’s recent EU pronouncements owe more to events that happened in the last century than those that are taking place in the current one.
If your father/mother/aunt/uncle or whoever were to help you to sort out your finances I suspect they would not then allow you to continue to live the lifestyle that led you to seek out their help in the first place. They would probably want to place a few restrictions on how you lived your life to ensure that the same problems did not recur in a few years’ time, even if you did not particularly like the idea. The German reluctance to write a blank cheque without conditions does not seem unreasonable in this context.
Modern populaces want all the good things but believe that other people, better known as “the rich”, should pay for them. Politicians know this. Equally they know that “the rich” are much harder to tax than the not so rich. Therefore when borrowing was cheap and plentiful surprise, surprise that is what they did. Now it is all coming back to haunt the future generations that will have to suffer for it.
Or maybe all along it was an elaborate new way to redistribute wealth. Fleecing “the rich” through loans that would never get paid back. Except of course it wasn’t just “the rich” that wouldn’t get their cash back. It would be all of us, via our pension funds or withdrawn essential public services that we reasonably believed we had paid for through our taxes.
We can of course once again blame the bankers. Given that there still seems to be little holding to account of those who’s reckless gambling and connivance in concocting the financial packages for both the public and private sectors that have subsequently unravelled that is an understandable reaction. However we all know that there was more to all this than the “greed is good” brigade.
The sad accountant in me is still trying to get my head around how the various debtor countries will ever pay back what they owe. All are still running annual deficits, and will be doing so for some years to come, which to my mind implies that they need more cash to fund these as well as refinance all the borrowings that need to be refinanced. Simple mathematics dictates that unless something drastic happens, sovereign debt crises will persist for the foreseeable future.
In our world of course businesses in this position would simply go bust, and given such a spectacular insolvency, those involved would find themselves at the very least banned from being company directors for a considerably long time if not facing more serious consequences. Maybe it is not possible for countries to manage their finances like Enterprise Britain has to, but hey we can dream can’t we?
When I started as a banker in New York South America was going bankrupt. One wise old banker (he must have been at least 35) told me the debt was not the problem - only the time the banks had to write it off.
ReplyDeleteThat was 30 years ago - we now talk about how successful many of these countries are and the banks are even richer and no wiser.
Give all the banks 20 years to write of the their Greek debts and presto - problem solved.