Wednesday, May 2, 2012

Greek Bailout 2: More Austerity Measures

Greece has had a reprieve from the European nations that went out on a limb and funded a second bailout. The only option if the nations had declined was for Greece to pull out of the Euro and continue on using their currency which at this time is pretty worthless. Here's the background on this second bailout.

First, it comes with an agreement for the Greek government to increase the austerity measures that have been in place since the first bailout. Keep in mind that Greece's unemployment rate for the younger population is close to half. In addition to that, the current austerity measures have led to desperate parents abandoning their children because they can't afford to feed them. They have led to a crisis shortage of basic medications, even aspirin. The Greek residents who could afford to leave the country did so years ago. Those left, raised in a heavily-funded Socialist state, who have grown up with the government always there to take care of them are only now realizing that in Socialism, eventually you run out of other people's money. This is all BEFORE the required additional austerity measures are put in place.

Second, Greece could very well be the linchpin that once collapsed will lead to the collapse of the countries who bailed them out, and to the collapse of the Euro. Spain, Portugal, and more were not in a cash rich situation when they agreed to the second bailout. These nations know that they have no hope of recouping the money they gave, they agreed for a second time to prevent the total collapse of the Greek economy right now. Once the new austerity measures are in place it will only prolong the inevitable collapse.

Third, Greece produces very little. They have no viable way in sight to begin paying back these bailout funds. Since austerity measures limit what companies can charge consumers for basic goods, most Greek companies, drug companies included, must sell their wares outside of Greece to have a chance at making a profit. This is why hundreds of Greek companies have closed their doors. With more austerity measure on the way, the companies that have survived have little hope to stay open.

Fourth, history proves in each case where an economy has had to implement austerity measures to stave off total collapse, those measures have failed miserably. The Wiemar Republic is just one example.

Fifth, the countries that gave to Greece for this bailout are close to collapse themselves. Even Germany, the strongest of all European nations financially is losing ground. Since Germany agreed to be a part of the bailout, the domino effect of the distress of other nations has resulted in a slowed rate of growth for the German economy. They are essentially in a free fall together trying frantically to not be the first one to hit the ground.

Keep in mind that the coming collapse of Europe is not going to have a neutral effect on us. Our globalist economy is too intertwined with all of these nations. A collapse of one European nation will cause the collapse of another and another until the Euro is worthless. Ten business days later is the estimated time it will take for the US economy to take a hit. Some have projected as long as a month, regardless of which it is, keep your eye on Greece and the rest of the countries in Europe.


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