The measures that would solve the debt problems overnight:
Give Collapse a Chance:
Remember how the EU and the USA, a couple of years ago, were desperate to “prevent a catastrophic collapse?” European banks bailed out their speculators. Then governments bailed out their banks. Then, they bailed out the countries that had bailed out their banks. In America, the government bailed out the banks, the insurance companies, the automobile manufacturers and the list goes on. Then, the Europeans and the Americans bailed out each other.
The bailing out is still taking place after all these years. The US is running a budget deficit so large that we have lost track of how much it really is. Was it $1.5 trillion or more? While in the EU it isn’t much different. Nonetheless, as per today, Europeans secretly keep preparing big bailouts for Greece, Cyprus, Spain, Portugal, Italy, and who knows whom else.
Every bailout makes the world poorer, because it’s clearly bad money thrown after good money. Greece or Italy does not suddenly become a good credit risk just because it is lending more money. And people won’t be made richer because the feds and the central banks offer them more debt at an even cheaper rate!
Doing more of the same thing:
Doing more of something that didn’t work is not a good idea either. It is not a good proposition to put more money into an investment that isn’t paying off, or to allocate more resources to an industry that stopped producing real benefits a generation ago.
What will happen when Greece finally defaults? In a bit of a twist of irony, Greece played a role in the first ever recorded debt crisis more than six thousand years ago. Bloomberg reports:
“History’s first sovereign default came in the 4th century BC, committed by 10 Greek municipalities. There was one creditor: the temple of Delos…”
Opinions on the Greek default have resulted in two camps. One side sees a catastrophic event to be avoided at all costs. The other, a healthy act of cleansing that can’t come soon enough.
Angela Merkel, expressed her darkest fears, arguing a Greek default would “destroy investor confidence” and could “spark contagion” in the style of Lehman Brothers in 2008.
“We need to take steps we can control. What we can’t do is destroy the confidence of all investors mid-course and create a situation where they say that if we’ve done it for Greece, we will also do it for Spain, for Belgium, or any other country. Then not a single person would put their money in Europe anymore.”
On the opposing side, Jim Rogers believes Greece cannot default fast enough — and says he would buy euros if it did. Via a Reuters’ interview he explains:
Well I hope that Greece defaults. It would be good for Europe, it would be good for Greece, and it would be good for the world. It would be good for the euro if they finally accepted reality and allowed Greece to default, made the people who made the bad loans take their losses, and they made this all happen to a couple of other countries too.
Everything would go down a lot… but that would be such a magnificent buying signal. I would buy all the euros I could get my hands on at that point, because then we would know we’re going to have a sound currency. Then we would know we’re going to have a strong euro.
It’s not going to happen, but if it happened that way, wow. Then we’d have a serious competitor to the U.S. dollar.
The measures that would solve the debt problems overnight:
Let’s have that catastrophic collapse and get over with it. Better now than later. It will only be worse if it is postponed. The problem can’t be fixed. When you borrow too much money, you have to pay it back. Or default. Better to do it as soon as possible. The ‘fix’ is obvious. Bite the bullet.
But there’s more. There is also the zombie factor. This is something that can be fixed easily. As institutions age — including private industries — they attract parasites. It’s all part of the picture of a society in need of a revolution, or a kick up the backside. Allow businesses and nations to go broke. No subsidies. No bailouts. No below-market loans. Just let them crash and burn.
Then, cut taxes to 10%, without deductions. No ifs, nor buts. Russia already has a tax like this. And it is booming. Prohibit borrowing, and money printing. These measures would solve the debt problems overnight. They would protect the dollar and the euro. These measures would reassure investors, businessmen and homeowners and most importantly they would wipe out budget deficits.
A flat 10% tax rate would cut out most of the zombie businesses. Freed from the deadweight of zombidom the private sector could finally get back to work.
The biggest risk is political. EU politicians aren’t interested in this kind of overhaul, which is not in their own interest; too many of the lucrative well-paying jobs would be gone. Rather than buckle down to restore confidence, they are hell-bent on a different more time-consuming redesign.
Juncker, the European Commission president, asserts that the “fight for the economic and political future of Europe” requires “a new federal moment.”
What nonsense: it requires apologies to the EU’s furious voters. A headline in the German DIE WELT says it all:
YOUNGER GENERATION HAS NO IDEA WHAT TO EXPECT.
The Greek debacle is the result of the joining together of incompatible economies. The 19th-century Latin Monetary Union embracing France, Italy, Spain, and Greece collapsed when the Greeks (and the pope) were caught debasing the common silver coinage and lo and behold, then too, the world did not end.
The euro cannot be dismantled without a huge risk, considering today’s turbulent conditions, but its long-term future is another matter. The colossal resentment generated by “forced” euro membership, towards the debtor and creditor members alike, poses the real threat to Europe as an ideal. EU-turmoil is a headache the world does not need. But on the other hand, headaches are seldom fatal.
In China, national economic policy keeps interest rates similarly too low as well. It’s an overt, albeit indirect, government subsidy to banks. The banks, in turn, make dicey loans, on favorable terms, to favored, often state-controlled entities.
The result of these low Chinese interest rates and many years’ worth of overly risky loans is embodied in stories about excess capacity across the entire Chinese industry and uneconomic showcase projects that are monuments to the vanity of some big-shot officials.
In China, as with everywhere else, money that’s “too cheap” leads to all manner of silly boondoggles. Just consider some of the stories, like empty airports, deserted shopping malls, see-through cities, bridges to nowhere, idle steel mills and silent shipyards.
The U.S. elections revealed the US is heading more toward the European economic model that the shift into gold should accelerate, as is the case in China, where Gold is their hedge for the slowly eroding value of China’s U.S.-Treasury holdings.
Anyway for everyone with common sense, its time to prepare oneself for a historical turn in society, rather sooner than later, the usual will change for the new future.
In below video a self-described libertarian, and his business partner, Dr. Steve Lantier, show how they transformed a hospital and its staff’s mentality to be prepared for the new era, after they had become totally disillusioned with the way patients were being treated.
In 1997, Smith and Lantier bought the shell of a former surgical center with the aim of creating a for-profit facility that could deliver first-rate care at a fraction of what traditional hospitals charge.
If you woke up tomorrow morning and all of a sudden your money was worthless- what would you do? Don’t think it can’t happen; you may want to contemplate this possibility again. Please get yourself prepared to ensure that your family is protected in case things all of a sudden turn sour.