Greek Financial Crisis Deepens

We are continuing our concern for what is occurring in Greece as well as the other PIIGS countries.  This deepening crisis can only worsen things here. When will we stop bailing out countries and businesses which should be required to go out of business or restructure? Of course a country cannot go out of business but it sure could sell assets and take other actions to improve itself financially.

As I read articles like the following, it sounds like the Greeks are holding a gun to the head of the Eurozone, can it be so? If so, should they not be allowed to fail?  If there is no fear of failure based on the premise that someone will bail us out, are we not opening the gate to more failures?

The near failures of GM and Chrysler and the bailouts of the banks should be a clarion call for us to realize that we should not be doing this.  What happens when the next big company comes to the government for a bailout, will it be granted?  If so, what is to stop any other large, mega-industry, multi-national company from demanding money from Uncle Sugar?  If not, would that tact be discriminatory or is it the way we should be doing business.?

Bail-outs of countries, companies or industries may be the right thing at that moment but it sets up future consequences that are far more dire.  No company or industry should be too large to fail. Failure is part of the free market system. If you build bad products, run the firm poorly or spend too wildly,  the business must go. It does the system no good if you keep bad apples around. A bailout tells others that they can do "stupid" things and the government will save them. When in reality, they are past saving.

The free market system is no different from nature's "survival of the fittest."  Yes, that may seem mean, but a weak company should be allowed to go out of business. From its ashes, new companies will rise. It must be that way!

How do you handle a country cannot be any different. It must either get control of its expenses and revenues or it must sell off assets or surrender its sovereignty. Saving weakness only weakens everyone.

So do I make sense?  Let us know.

Conservative Tom

Greece: No second bailout, no euro

Greek govt spokesman warns that country will have to leave euro without second bailout

ATHENS, Greece (AP) -- Greece's government warned Tuesday that the debt-crippled country will have to ditch the euro if it fails to finalize a second, euro130 billion ($169 billion) international bailout.

Spokesman Pantelis Kapsis said negotiations in the next three or four months with international debt monitors will "determine everything," including whether Greece escapes a disastrous bankruptcy.

Greece is being kept afloat by a first, euro110 billion ($142 billion) international bailout agreed in May 2010, after investors shocked by the country's huge budget deficit and debt mountain demanded sky-high interest rates to continue buying Greek bonds.

An additional bailout was agreed in October, when it became clear that the first batch of funds would not suffice, but that deal has yet to be finalized.

Sorting out the details of the bailout, which also foresees a euro100 billion writedown of Greece's privately held debt, is the main task of the coalition government headed by former central banker Lucas Papademos, whose short mandate is expected to expire in early April.

"This famous loan agreement must be signed, otherwise we are outside the markets, out of the euro and things will become much worse," Kapsis told private Skai TV.

In return for its first batch of rescue loans from its European partners and the International Monetary Fund, Greece imposed deeply resented austerity measures to contain its budget deficit — set to hit at least 9 percent of GDP last year despite repeated spending cuts and tax hikes.

Kapsis said further cutbacks, possibly including new taxes, might be required to address a revenue shortfall,

"We will see what the shortfall is and it is very likely that measures will be required," he said. "I also don't believe it is easy to impose new taxes, but what does cutting spending mean? To close down the public sector?"

"There is no easy solution," Kapsis said.

The details are expected to be determined during talks later this month with debt inspectors from the EU, the European Central bank and the IMF, who will determine whether the country receives its next loan installment.

"We can't take (approval of the next installment) for granted," Kapsis warned.