Tyler Cowen writes: Essentially, as far as I can tell, the Eurozone just created TARP for whole countries. Meanwhile, the Greeks themselves seem fairly unwilling to stop borrowing so much money This seems, basically, like a homeowner who can't possibly hope to repay his mortgage shooting up a bank because it won't give him a second mortgage
This is the shit that happens when we elect a Muslim president. It's not a coincidence that Obama and Ouzo both start with the letter O.
I'm most perplexed by young people rioting at the prospect of not being saddled with even more old peoples' debt.
Huh? They are rioting against the "government's ability to shepherd through tough austerity measures in exchange for a €110 billion ($143 billion) bailout loan from the European Union and the International Monetary Fund." Says your quote.
Well, what's going on is basically the government is paying out huge amounts to older folks by borrowing that money. The older folks, of course, won't be saddled with the debt, and are the overwhelming beneficiaries of the government payments. Hence, the austerity measures they young'uns are protesting against will actually help them more. In essence it's something like this Society is composed of Group A and Group B. Every year, A+B make $100, and every year they've borrowed money, spending $150/yr. This year, lenders are looking at this society and deciding they don't want to loan any more money. A+B are both pissed off at lenders. However, when you really look at that $50 a year A+B were getting, A got about $10 and B got about $40. So going forward, what's happening is an "austerity measure" is being proposed under which lenders still lend some amount, say $25/year for a while, if A+B agree to spend only $125 a year. Not they're still actually only making $100, so on net they're still borrowing, just borrowing less. Under the austerity plan, A gets $5 of the loan and B gets 20. They don't want to cut at all. When it comes to eventually paying back that money, B is going to up and leave. meaning that A might make $100/yr by themselves, but they won't be able to spend $100 any more. At some point, they'll have to cut back further and only spend $75/yr and give the other $25/yr or so to the guys who've lent them money forever. Or, more likely, they all try to stiff the guys who lent them the money.
It's the lure of free money. So many of us have received so much for free for so long (and I don't consider myself above this) that it's hard to understand that we can't fail to give things up without serious consequences sometimes. Ed O.
Well said. Pretty good opinion piece about the subject here by Thomas Friedman: http://www.nytimes.com/2010/05/09/opinion/09friedman.html?src=me&ref=general
^^^ Nice find. Well put. It is a scary thing that people don't realize (or want to admit) that cuts / sacrifices will need to be made or else this ship is going down.
I once remarked to my dad, and he didn't really disagree, that my generation was perhaps the first generation in memory to be more responsible than our parents.
