Doing it Greek Style

It so happened that today that while flipping the TV channels, I bumped onto the Carleton University TV channel. Economics 101 was the course. I remember taking it when I did my economics under grad. What do I remember from that course, not much, but I remember a couple of things.

1) In a free market, Demand = Supply

2) When it comes to macro economics, SAVINGS is where its at.

When you save money, this money ends up being used by your bank and loaned out to others. Every dollar you save, gets used over and over and over. Its the stuff that is called liquidity. It is what allows a small business to pop up next door. It’s what puts food on your table and on your friends table. Its the healthy way to lend and borrow. Without savings, a government simply sells bonds and borrows either from you, but since you have no savings to buy the bonds, from other countries like China.

If you are not able to save, and worse, unable to live within your means, you start to borrow. When you borrow to much, you eventually get to a point when you can no longer borrow, at which point a bank comes and takes your assets. In a normal situation, when you are no longer able to borrow, you go bankrupt, hopefully you sort out life, recover and rebuild.

But these days, basic economic principals are being ignored. The EU decided to bail out the Greeks and 1 Trillion is being committed to this effort. Bail out Greece? Is this right? Well basic common sense says, no way. The problem is that Greece is so much in debt they are bankrupt, so how is it then, that allowing them to borrow more, a LOT more is going to help them?

What is more disturbing, is that fact that the DOW was up 405 points today. Apparently the market is happy that some German folks are going to risk a Trillion to help the Greeks spend more beyond their means.

Time to make some hard choices folks, you can not solve a debt problem, but giving people not capable of managing money more debt.

Are some German citizens getting screwed today? I think the latest local election results form Germany are clear. We dont like it Greek style.

What do you think? Would you give some of your hard earned money to bail out Greece?