While Abbott and Costello’s “Who’s On First” is probably the funniest comedy skit in the history of mankind, the following has similar overtones when dealing with a much more serious problem.

There are some people that, no matter what I’m doing when I hear them, I have to stop and listen. On the short list, very near the top, is Mohamed El-Erian of bond investment giant, PIMCO.

No matter what the crisis, there have always been people that have said “this time is different!” and they’ve invariably been proven wrong. Time and again we think we’re faced with situations that have never occurred before only to be shown “this time” has happened frequently. After all, there’s nothing new under the sun (Eccl 1:9).

So when someone like El-Erian says, not quite that, but comes pretty close, I have to wonder. The major take away here, and something he wrote last week after the EU bailout was announced, is that we’re in a place we’ve never been before.

Here’s a great article that says, pretty much what I said yesterday – only much better and clearer (as usual). Operative quote:

“The Greeks would rather kill each other in the streets than work and pay taxes.” – the author quoting a friend.

Wow! I wrote that post yesterday just minutes before the news began leaking about a 500 billion euro bailout of ALL of the PIIGS (Portugal, Italy, Ireland, Greece, Spain).

I should have guessed that socialists can’t allow failure even when it’s brought on by the willful ignorance of an entire populace that deserve the poverty that was looming over them.

Instead this action will socialize the pain by stealing from those that are productive. When the revolution comes … I hope I have a camera.

According to a few articles today the EU and the IMF (read “US”) are going to announce a new bailout of Greece. This one apparently is for immediate disbursement (read “no need to actually complete the austerity programs”). That means that the whiners and thugs that pass for the Greek populace have now intimidated the EU into submission.

Angela Merkel

All two year olds should learn a valuable lesson from this. If your mother is someone like Angela Merkel, tantrums work. This is a perfect demonstration of moral hazard.

Apparently the German people are not thrilled; Ms. Merkel is in danger of loosing her majority in Parliament.

Having spoken to several German’s about this issue, it seems to me they’re not ready to pay for the much better benefits, much more generous pensions, earlier retirement, much worse corruption, and a higher percentage of people working directly for the state.

Commenting on the issue in Greece, Charles Ortel said on Bloomberg on May 6th (I’m getting caught up):

Does the population (of Greece) have the internal will to actually make the tough collective choices that need to be made to get this state back on track. And I think the early returns from Greece are very distressing. We see, in that awful case in the bank [where three people were burned alive in the riots] signs that the population just doesn’t get it.

Comparing the experience of the UK under Thatcher to Europe, British economist Kit Juckes said on the same interview:

I don’t know if they [the rest of Europe] get the idea that the social structures in Europe are not affordable anymore, and that they have to change. When you look at Greece, clearly, the people think the bank’s to blame, banks caused all this problem, or foreigners, or the government. Not, ‘we all borrowed too much money and spent it […], and now we don’t want to pay it back’ that’s difficult for people […]

Let’s face it, the cowards in the EU blinked, kicking the can a little further down the road. The failure of European socialism may have been delayed a few days or months, but when it finally comes it’s going to be massive and now even more cataclysmic.

Government spending per household

Hat tip: Mark Horne

When I begin to get frustrated over what appears to be the reigning ignorance on the socialistic tendencies of the current and former administrations, stories like the following help me remember that free market principles are not at all obvious to many.

I remember being told by an elderly Japanese that used to be senior in the foreign ministry, what a shock it was when they lost the war and the Americans came onto their island. And he said “the American’s said something quite remarkable. They said to us, ‘we’re not going to rebuild your economy after the war.'” And he said “that struck us as curious, because why should they? And then they said something even more curious which is ‘but we’re going to let you rebuild your own economy, through your own efforts, by admitting you into the world trading system.”

And this elderly Japanese said “that seemed crazy. Here we were desperately short of food, raw materials, building materials, pharmaceuticals, everything you needed; and these crazy Americans were telling us you got rich by shipping it abroad and selling it to foreigners.” He said “it made no sense to us and yet, we had to do it, so we did do it … and it did work.”

John Llewellyn, during an interview on Tom Keen‘s “On The Economy,” April 1, 2010.

… But then again, if these principles were obvious to most Americans 50 years ago, I wonder where that puts us in the next 50 years.

I doubt it will take that long before we look just like Greece does today.

“Do nothing and get something! That’s the best thing that’s happened since oreos!” Say the P.I.G.S..
-Danny, my 13 year old, commenting on the European situation

I’m a bit behind on listening to my Tom Keene podcasts. On March 17th he and Ken Prewitt interviewed Economist (*cough*) Paul Donovan. When asked about the possibility of the breakup of the European monetary union, he noted that the current weakness is due to the fact that the union can only exercise monetary policy and not fiscal policy. His solution? …

Having a monetary union without a fiscal union doesn’t really work in the long term […] What you do is you have some kind of central tax and spending mechanism which takes tax revenues from faster growing parts of the monetary union, and spends those revenues directly in the weak parts of the monetary union.
– UBS Economist Paul Donovan on Bloomberg Surveillance, March 17, 2010

By the end of the interview he was quoted as saying that the German people shouldn’t be upset about bailing out the Greek pensioners. The mind-numbing lunacy of the socialist mindset is stupefying.

“Any man seeking control of the engines of the state, the better to accomplish his plundering, always promises to make the great businesses pay taxes — and the envious man cheers. But of course, no business ever paid a tax without passing it on to the consumer, and the envious man finds himself paying for the pillage he ardently supports. But don’t feel sorry for him; he is an envious fool and deserves everything he gets, both good and hard. A wise man hates all forms of envy”
Doug Wilson Joy at the End of the Tether

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