This page has been archived and commenting is disabled.
Austerity Measures Only Lead to More Bailouts.... So Who's Going to Bailout the ECB When It Goes Bust?
Don’t let the title fool you here. I am in no way condoning the profligate spending and absurd debt levels that comprise the welfare economies of Europe (and most of the developed world for that matter).
However, the idea that somehow imposing austerity measures will work on the PIIGS, which are already watching their economies go down the tubes, is outright insane. These countries are broke. Trimming spending here and there doesn’t do anything when you’re sporting Debt to GDP levels over 160% (over 300% when you include unfunded liabilities).
In the case of Greece in particular, one has to wonder if the austerity measures (especially those coming out of Germany) are in fact just a means of forcing Greece out of the Euro without explicitly demanding it.
Let’s consider Greece’s economy from the perspective of age demographics.
Real Clear Markets shares the following facts.
- Greece’s fertility rate is 1.3 children per women. This is nearly a full child below the “replacement rate”: the number of children needed to maintain the current population.
- Greece’s population of 65 and over has soared from 11% in 1970 to 24% in 2010. It will hit 33% by 2050. Meanwhile, Greece’s working population will decline to 20% over the same time period.
- Because of this, Greece spends 12% of its GDP on pensions.
As if this weren’t bad enough, the unemployment rate for Greeks aged 15-24 is 40%. For Greeks aged 24-34 it’s 22%. Imagine being a young person, not being able to find a job, and then knowing that huge percentage of your efforts (42%) are going to be taxed to fund all the crazy social welfare programs for Greece’s aging population. Small wonder that seven out of ten young Greeks want to work abroad and four of out ten are actively seeking work outside of Greece.
Also, it’s no surprise that those Greeks who do have jobs, don’t want to pay this massive tax load. Consider that the Greek working population is roughly seven million people. 95 percent of them declare annual income of less than 30,000 euros.
So that’s the situation in Greece. Terrible age demographics, an economy that’s in the toilet, and a culture that believes paying taxes is for suckers. The idea that this country will solve things by receiving more debt while imposing austerity measures is ridiculous. If anything, the austerity measures make it even less likely that Greece will pay off its debts or get its fiscal house in order… which in turn means it will need more bailouts.
I’m not a fan of welfare states nor am I a fan of fiscal idiocy. But I’m equally offended by stupid ideas that have no chance of working and involve wasting hundreds of billions of Dollars.
After all, there’s literally no proof that bailouts even work: Greece received 110€ billion in bailout funds in 2010 (an amount equal to almost half its GDP)… and still posted GDP growth of -4.5% in 2010 and -6.8% in 2011.
The reality is Greece needs to complete a MASSIVE debt restructuring to the tune of bondholders taking a 70% haircut across the board. That and that alone would get Greece on sound footing. Anything else is just kicking the can AKA wasting money and making everyone’s lives more miserable.
Speaking of which, the ECB, which is somehow supposed to be saving Europe just handed out €529 billion to some 800 banks. Only two months ago, it handed out €489 billion to just 523 banks.
And this is a sign of progress for Europe? More banks needing greater amounts of money?!?
The reality is Europe is finished. Done. Curtains. The ESM, LTROs, all of that stuff is pointless as the math simply doesn’t add up. As Jagadeesh Gokhale of the Cato Institute put it, “The average EU country would need to have more than four times (434 percent) its current annual gross domestic product (GDP) in the bank today, earning interest at the government’s borrowing rate, in order to fund current policies indefinitely.”
The money isn’t there. Europe is broke. Completely and totally broke. The whole notion of bailouts and debt swaps is pointless here, you’re talking about systemic failure due to the entire financial system being overleveraged and based on spending patterns that are unsustainable in any way.
Make no mistake, we are heading into a Crisis that will make 2008 look like a joke. The money for all of these various programs (both in Europe and the US) simply isn’t there. So this time around we’re going to see stock crashes AS WELL as civil unrest, food shortages, and the like.
If you’ve yet to take steps to prepare for this, I can show you how: my Surviving a Crisis Four Times Worse Than 2008 report is chock full of information on how to not only survive but thrive during the months to come.
Within its nine pages I explain precisely how the Second Round of the Crisis will unfold, where it will hit hardest, and the best means of profiting from it (the very investments my clients used to make triple digit returns in 2008).
Best of all, this report is 100% FREE. To pick up your copy today simply go to: http://www.gainspainscapital.com and click on the OUR FREE REPORTS tab.
Good Investing!
Graham Summers
PS. We also feature four other reports ALL devoted to helping you protect yourself, your portfolio, and your loved ones from the Second Round of the Great Crisis. Whether it’s my proprietary Crash Indicator which has caught every crash in the last 25 years, or how to stockpile food (where to get it, what to buy, and how to store it) our reports cover this information in great detail.
And ALL of this is available for FREE under the OUR FREE REPORTS tab at: http://www.gainspainscapital.com
- advertisements -


Mens Vibram FiveFingers and Womens Vibram Shoes was designed to reinvent the pleasure of 'barefooting.' It allows us to go back to the beginning, the way we were supposed to live. The moment we start using the Cheap Vibram Five Fingers to move bare feet, we experience a sudden resurge of a lot of abilities that we had lost due to years of forcing our body into unnatural movement. Gradually, we start to get back our original way of walking, the pain that we used to feel in our calf muscles or around our waist suddenly vanish, and most importantly we start feeling free and happy.
The Vibram FiveFingers Shoes from Vibram was originally designed to increase the potential and performance of runners, athletes, and other people involved in adventure sports. With admit importance of barefoot running, Five Fingers Shoes have promoted the culture of barefoot running, and now many athletes world over find the Five Fingers Vibram their best choice. The increased grip, steadiness and quickness offered by barefoot moving with five finger shoes is useful for many, who have to make quick reflex-based movements or tackle rough terrain, muddy waters, slippery sands, and the like. The Vibram Five Fingers have already become popular among people involved in climbing, fitness training, martial arts, light trekking, yoga, canyoneering, running, pilates, sailing, boating, kayaking, surfing, flats fishing, travel, and Canoeing.Vibram Five Fingers Sale from Five Fingers UK nline with big discount and fast delivery,better choice for you
All affordable Mulberry Bags make a survey of their very own; you'll come upon hand bags that fit each and every single kind of style personality and elegance. Take it for a rocking night out, every time you might be off to function or perhaps should you are out basically to satisfy track of buddies. With Mulberry Alexa bags that are generally in fashion you may by no means really feel outdated when it comes to manner and luxurious.
You are able to select out of your several colors of Mulberry Handbags that are trendy, the materials used are trustworthy and in addition excellent top quality in Mulberry Sale online store . This can make specific your Mulberry Bag lasts through differing several weeks. Group it along with any kind of clothing and they are positive to create the way record using their vogue, color and main top quality finish.Buy Mulberry Outlet from Mulberry Factory Shop will you save a lot of time and money because of the full collections available and big discount,and the same time trustful!
Mulberry Alexa Bags
Mulberry Bayswater Bags
Mulberry Briefcase Bags
Mulberry Clutch Bags
Mulberry Cross Body Bags
Mulberry Handbags
Mulberry Bayswater Holdalls Bag Black
Mulberry A Daria Clutch Bag Purse Black
Mulberry Alexa Holdalls Plum Bags
Mulberry Calf Leather Clutch Bag Purple
Mulberry Alexa Holdalls Oak BagMulberry Hobo Bags
Mulberry Messenger Bags
Mulberry Shoulder Bags
http://www.alexabags2012.net
I start to believe that this October chart is correctly showing the February peak in EUR/USD, principal trend. That means, that after little correction along time axis to match the 1,35 peak exactly (I will do it later when I am more sure) , there should be an event ( or nothing special) that would trigger sharp EUR downslide in the END OF APRIL-early MAY ending in November/Early December 2012.
http://www.tfmetalsreport.com/comment/78027#comment-78027
What could that event (or general increasing weakness in EURo area) be?
There are no more bailouts. Its over. Best to arrest the criminals, hang a few, declare bankruptcy, gold/silver, 100% fractional reserve banking, get on with life. Restrict federal governments to 11% of the GDP. Government is a fucking waste of life. Avoiding war is a good thing. No doubt the criminals will start a few.
"Make no mistake, we are heading into a Crisis that will make 2008 look like a joke. The money for all of these various programs (both in Europe and the US) simply isn’t there. So this time around we’re going to see stock crashes AS WELL as civil unrest, food shortages, and the like."
hey stupid...in case you havent noticed THEY just keep PRINTING the money...OF COURSE ITS THERE! theres no end to this madness, until it stops working...then look out below! But you`re only about 10 years tooooo early right now!
Fuck the motherfuckers and enjoy your goddamn demise!!! Yep, here I sit, first in line on the blacklist. Go for it you cum belching whores.......show to the world just how powerful YOU ARE NOT!!! The majority always wins......you fucking pinheads are on the wrong side!
We don't "want" or "need" your stupid fucking asses anymore! Land of the FREE! Do you understand that fucking word morons? We are fucking thru with you!!!!!!!!!!
Good thing sales of ultra-expensive car brands such as Ferrari, Lamborghini, Mercedes, BMW, Rolls, and Bugatti are doing really well.
Human mattress dominoes attempt breaks world record
http://www.youtube.com/watch?v=VSwfqaVeCWs&feature=youtu.be
Your problem is you live AND trade in reality. Take the brown acid
http://www.hark.com/clips/ygmhswwswk-brown-acid-warning
What's the difference to FED printing?
there you go banging on about age demographics again Mr Summers
the average life expectency 200 years ago was about 45... today its 70 or 80. So we have a massively aged population in every country.. has that correlated to economic decline?
Of course not. Your fixation with age is bollocks isn't it Mr Summers?
You say austerity doesn't work, but the reality is there is no alternative to austerity for countries like Greece. They have to cut government benefits, because they can only pay for their current welfare system by borrowing 8-12% of GDP every single year. That option is either closed now or will be closed in the very near future. They need to announce a 100% default on all foreign held debt and then adjust benefit levels to match tax revenues. That is the only way forward for Greece. Anything else is just more can kicking down the road.
Greece just needs to default and go back to the drachma, they will be better off in the long run.
we all know about can kicking down the road. Tell me something useful like where does the road end. That's the billion dollar question. Waiting for apocalypse is starting to wear me out. With the housing bubble, I waited for a full three years; man that was tough.
I think that as long as the governments and central banks are aligned with their desires and policies that the can-kicking can continue longer than would seem possible. When one of the major players (U.S., Germany, China primarily) decide to break ranks, that is when the road will end. Problem is there won't be much notice when that happens.
My advice (for what it's worth) is to use this can-kicking interim to steadily prepare yourself for the future. I don't mean follow the retards into the hills with your chickens and ammo, but to pay off all your debt, steadily accumulate both gold and silver, position yourself to live without government assistance of any kind (including healthcare).
you don't impair the functioning economy to save impaired debt....you reliquidate (bankruptcy) bad investment....
banksters everywhere should be accounting for their losses - beating money out of orphans, widows, and the indigent is pure wickedness...
Lets get this fraud election over with so we can start to correct and let the system blow up.
maybe greece is a good vacation spot?
http://expose2.wordpress.com
100+% hair cut you meant..
Listen Phoenix Capital you have it all wrong.
Three-hundred billion euros are been thrown down the toilet every year for petroleum and other resources that are burned up for nothing. This is our finance crisis, waste that has been ongoing for decades.
Before credit bought our automobiles and the auto-lifestyle it was panzer divisions and Luftwaffes, before that it was railway guns and dreadnaughts. Before that it was steel mills and spinning factories, none of this has ever paid its own way, everything 'flourished' because there was always more and more debt.
Throwing cash into the gas tank is unproductive, giving cash to an old lady or a kid keeps it in the economy (until they throw the cash into a gas tank).
What is underway in Europe -- and in the USA and China, Japan, the UK and elsewhere -- is conservation by other means. The world goes bankrupt because it cannot afford to burn up a worthwhile good for zero-return any more. Our resource inputs are now worth more than the useless waste of the inputs. From an energy standpoint, the West and its imitators are insolvent. The so-called returns from wasting fuel do not meet the cost of the fuel. We cannot borrow any more because the waste is useless as collateral.
We either do something to solve the problem or the problem solves itself: we deindustrialize and make do with artisan economies that are highly localized (to enable goods-trade) or we are deindustrialized by the force of events. There is no escape, no way out, only pathetic attempts to forestall the outcome that is etched clearly by history and the consequences of our own actions.
Easy way or hard way, there is no other way. We choose to live or our toys murder us as they have so often in the past.
> Europe is broke. Completely and totally broke.
Roger that.
> Make no mistake, we are heading into a Crisis that will make 2008 look like a joke.
Roger that.
> So this time around we’re going to see stock crashes AS WELL as civil unrest, food shortages, and the like.
Roger that.
Been there, done that.
Remember what Europe looked like after 1945 ?
So - what's new ?
Ever been to Africa and seen how people live there ?
So stop the friggin panic mode and toughen up. It's all about priviledges. If you're obese you sure fear having nothing to chew on.
Karma, dude, karma.
Im all good. I gots my Diamond Gussetts and Alex jones seeds
BEN will.
He wants a staute of himself erected as the saviour of the FIAT/fractional system.
It's a nice circle jerk.
"So who's going to bailout the ECB when it goes bust?"
The Federal Reserve. Next question.
I really wonder -- are the so called leaders really that stupid. What do they honestly think the end game is going to be? What is the "real" agenda? Or are they truly this dim-witted?
Their end game is control of society not the accumulation of wealth.
PCR seems to be making a few quid out of all the hype tho:-)
Yep- that's what this facade has been about since Day 1- Luring in the Fed........