Tag Archives: Greece


Regarding the Greek crisis today in the New York Times we read,

“…the basic problem is the same. Both countries have a bigger government than they’re paying for.”

“We have not figured out the kind of government we want. We’re in favor of Medicare, Social Security, good schools, wide highways, a strong military — and low taxes. Dealing with this disconnect will be the central economic issue of the next decade, in Europe, Japan and this country.

Many people, including some who claim to be outraged by the deficit, still haven’t acknowledged the disconnect.”

One begins to wonder if it is really the New York Times one is reading. The paper of record continues, “…politicians, spendthrift as some may be, are not the main source of the problem. We, the people, are.” First mention on the list of those responsible for governmental overspending goes to Tea Party members. All doubts are removed; it is indeed the New York Times.

The article characterizes Obama’s promise of no tax increase for those earning less than 250,000 as unrealistic. That’s kind of them. The Chief Economist at Treasury is quoted, “It’s not a matter of whether we have the resources to solve our problems, it’s a matter of political will.” and the NYT adds their own comment “For now at least, our elected officials are hardly the only ones who lack that will.”

Can’t blame Bush, he’s gone. Can’t blame the current administration, that’s against newspaper policy. Can’t blame politicians while the Democrats are in control. That leaves the public. My fellow American’s, pleased be advised, you and I are the problem, not Washington.

Bob B

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Fat finger Freddie freed from fault

All it took was a trillion dollars worth of Euros. We said it would happen…this time. It happened…this time. The bailout will likely bring about 10 years of relative peace, or call it 3 election cycles. During this period we will find out if the close call put the fear of God in the minds of European voters or if they will continue with their socialistically modified form of capitalism.

On May 7th we wrote regarding the market gyrations, “the word is, that someone at Citigroup placed an order to sell Proctor and Gamble and hit the B key instead of the M key”. Indeed, that was the word at the time. The fat finger theory has faded, to be replaced by a big question mark. Nobody knows, so let’s speculate.

It was an act of inhumanity. Once upon a time human beings decided which stocks to buy or sell and at what price. This is no longer the practice except by a few elderly people who probably don’t have cell phones yet either. Today humans set strategy, and then delegate the details to computers to carry out the strategy. To paraphrase a well known cliché, “computers do, or crash and die, but never reason why”. Computerization, which I am calling inhumanity, is rampant on both sides of the street as well as in the middle of the pavement itself. By that I mean the buying community, the selling community and the exchange are all programmed to leave it to an Intel processor to handle the actual trading.

There was a great deal of nervousness milling about, stocks had run up too fast, Greece was scaring everyone, etc. So the strategists drew lines in the sand and told their computers to take immediate action if the lines were crossed. Normal procedure, but this time there was more uniformity of opinion among the players as to where to put the line and it was a tight line. Triggers triggered triggers and down she went, faster than humans could figure out why.

That’s my speculation. It remains, as usual, for Congress to investigate and deliver the final word so that we need speculate no more.

Bob B

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What caused the market crash of May 6th?

A thousand points a minute is 11 minutes to zero. Will Armageddon start tomorrow? At the end it was “only” down 365 points. At that rate it’s almost a month to zero, so there is time to plan.

At this hour the word is that someone at Citigroup placed an order to sell Proctor and Gamble and hit the B key instead of the M key. M is an awful lot of illions and a B is a thousand times an awful lot of illions. Supposedly this was not dollars; it was the number of shares ordered to be sold. In that case we have to multiply again, this time by 63 which was more or less the price of each share, more in the morning. less in the evening.

Proctor & Gamble is one of the 30 companies in the Dow Jones market index. When P&G got slaughtered the market index sunk faster than an oil rig and everybody yelled, it’s Greece! It’s Greece! Citigroup denies the trader story. Greece is too busy to address the issue.

In any event, market panic was the knee jerk (no hyphen) reaction. Relax; Greece is not coming to America. We have headed in that direction, to be sure, but even the biggest ships can be turned around. We are not going down, not this week, not ever without a fight. Fight we will, and win we will. It is 6 months to November.

Bob B

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A high ranking official in the Greek government invited my wife and me to dine with him, a highly principled man whom I know very well. He came to greet us at a private residence on a very crowded street in central Athens. Following some pleasant conversation we emerged to find the car standing on the busy sidewalk smack in front of the door. Once we were all comfortably seated in the car, the driver charged off the sidewalk, cut off all traffic and proceeded down the other side of the street as though on the way to the proverbial fire. No one protested.

My friend sensed my astonishment. He said I have tried to get him not to drive like that, but he says he must, because I am too important. It was an unmarked car so I asked why everyone gave way without protest. The people of Athens know a government car when they see one, he replied. The restaurant was Greek casual exclusive. For an added touch the US Ambassador paid us his respects while we were there. It was in the Old city, snuggled up against the mount upon which sits the Parthenon. It was a pedestrian only zone, but no matter, when we were done the car and driver were waiting right at the front door.

We were not surprised. I thought if privilege so soon becomes expected, is it any wonder that after a few years, privilege becomes seen as a right. Add that to the list of arguments for term limits.

I found Greece to be a fun place. It is a disorganized land where no one takes the details of law very seriously. Perhaps that is why it is a fun place. A one-way street sign simply indicates which way most of the traffic will be going. A No Parking sign means you may get a ticket but it does not mean you have to pay it.

That was all before the crisis. My host of a couple years ago is now a diplomat with the European Union and a mere observer of the Grecian scene The New York Times, with all its faults, is very good at covering things like this, but to paraphrase Ronald Reagan, one should “Trust the Times, but verify, especially if you have access to inside information”. So I called and asked an open question, “What are your comments”. The essence of his response was:

Too much spending, of course.

However, it goes beyond that. It would barely qualify as hyperbole to say the government has no computers. They literally do not know how many people are on the payroll. They are ill-equipped to enforce income tax compliance because they do not know who owes what. And everyone knows they don’t know.

Typically, a very high income earner declares something, partly because he wants to support society and partly because he knows he cannot get away with declaring nothing.

Unlike the United States where much employment is with large companies, in Greece 60 percent of workers are self-employed. If you need a plumber he has a price. If you need a receipt the price is 30% more. If you want to see a doctor you must bring something known as an “envelope”. There is nothing murky about all this, it’s just how it’s done.

It looks like the New York Times got it right. My friend is not of conservative persuasion. We rarely discuss American politics, but at the conclusion of the phone call he said “I see democracy is working very well in your country, unfortunately.”

Bob B

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Euro survives, this time. Dollar strengthens, for now.

The genesis of what is now the European Union was an economic agreement between six central European nations called the European Economic Community. The primary impetus was to discourage future wars between European nations. A common currency was not part of the original plan. From that simple plan it grew to what it was six months ago then declined to what it is today.

As it grew there was hope in much of the world that the € would replace the $ as the standard for international trade. Before Greece, call it 6 months BG, this looked like an imminent possibility. Bush ran our debt sky high and Obama has set us up for eventual bankruptcy. We have become dependant upon an adversary to support our debt and they were threatening to withdraw their support. Occasionally a tourist would report a refusal to accept the greenback in their travels. Then came Greece.

It had to happen. One can spend more than ones income and get away with it for a long time, a very long time if you are a nation and can raise taxes each time the next financial crunch occurs. But if spending is not controlled, the limit of what can be extracted from the people is eventually reached and that is when the fertilizer hits the circulator.

Germany has long been the economic strength of Europe and so it will remain for the foreseeable future. Greece has been what Greece is now for many generations and so it is likely to remain for the foreseeable future. As Walter Cronkite would put it, “It is the culture, stupid!” One cannot imagine a time when Greece would need to bail out Germany. Cultures do evolve, but evolution is a very long process. Random Thots recommends The Character of Nations by Angelo Codevilla for further insights on the subject.

We are always happy to rescue a neighbor in need due to no fault of his own, We will grumble, but still rescue a neighbor whose need was a predictable consequence of irresponsible self serving behavior, ,,,once. How many times will the nations of achievers be willing to bail out the nations of perpetual under achievement is yet to be determined.

Bob B

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