Will all those PIGS in Europe get what they deserve? And if they do, should we care?
Sadly, the answers are, probably not. And yes, we should, because what happens there will have a significant impact on those of us here in the good ol’ USA.
First, who are these PIGS (sometimes written as PIIGS and occasionally even as PIIGSTY)? Basically, they are some of the socialist countries in Europe that have gotten their budgets caught in a wringer. They’re facing all sorts of financial problems at home. And unfortunately, their habit of spending money they don’t have is having bad consequences for them… and for us. If that sounds familiar, it should.
The acronym PIGS stands for Portugal, Italy, Greece and Spain. You can add Ireland to the longer version; and Turkey and Yugoslavia to the longest one. Right now, all of the attention is on Greece, so let’s begin there.
And let’s start with a dirty little secret no one wants to admit: When Greece was admitted to the European Union (EU) a while back, everyone involved knew that Greek authorities lied about the fiscal situation in their country.
Let me repeat that, to make sure you understand: Greece didn’t come anywhere close to meeting the incredibly lax fiscal requirements to become a member of the EU. The powers-that-be in that socialist consortium wanted Greece in; the socialists in Athens who ran the country wanted Greece in; and all of the kept media in Europe wanted Greece in. So everyone agreed to keep silent about the actual facts. With a wink-wink and a nod-nod, Greece was accepted.
If there was anyone bold enough to say that this emperor wasn’t wearing any clothes, his remarks were drowned out by the litany of “hoorahs!” from all the people who were oh-so-eager to get Greece on board. You can’t build the socialist super-state of Europe, otherwise known as the European Union, without them, you know.
So what happened? Remember the old axiom, if you want more of a particular behavior, reward it. If you want less of something, punish it. (Pardon an aside here, while I note that it has been the official policy of the United States government for most of my lifetime to reward laziness and incompetence, and to punish hard work and success. Guess which one we’ve been getting more of. Any wonder we’re in the mess we are?)
But back to our favorite baklava makers. Greece’s admission to the EU meant that her citizens and her government could go on the greatest spending binge they’d ever seen. Grab it while you can, guys! The money is free, free, free! We’ll worry about paying the piper when the time comes. If we’re lucky, maybe we can do what our cousins in the U.S. have done and foist all the bills off on our grandchildren.
Sorry, guys. We can do it, but you can’t. The boss of our central bank, otherwise known as Helicopter Ben Bernanke, can print or borrow all the money he wants. Heck, last year alone he created more than $2 trillion out of thin air. And you know what? The world still stands in line to loan Uncle Sam all the money he needs.
But Greece isn’t the U.S. and the drachma isn’t the dollar. Your day of reckoning can’t be put off forever. In fact, it’s here now. Nobody wants to loan you money anymore.
As a member of the EU, Greece was required by law to keep any deficits to an absolute maximum of 3 percent of GDP. This year they’re running four times that amount, with a deficit totaling 12.7 percent of GDP. No wonder cautious lenders are charging them more than double what Germany must pay to borrow money. That’s what happens when your creditworthiness stinks—as our leaders in Washington may soon find out.
For the past week, the biggest question in the international financial community has been who will bail out Greece? I’m betting it will be Germany. The reason I say so is that German officials have officially denied that they will do it at least three times. When government officials are this adamant about not doing something, I know it’s almost a sure thing. (Who was it who said, “Never believe a government policy change until it’s been denied at least twice”?)
If Greece gets bailed out, you can count on seeing a lot more PIGS line up at the public trough. Remember, what this is really all about is building a socialist New World Order. That was the modus operandi behind the creation of the EU in the first place. It is why every participant country was required to abandon their own currency in favor of something called the Euro. And it is why the standard for admission to the EU keeps slipping lower and lower.
By the way, that is also why you can expect to see Barack Obama start arm-twisting the State Department and Congress to “come to the aid of our Greek friends.” We’ve got it; they don’t; and in BO’s curious worldview, that’s all the justification he needs for taking your money and giving it to others. “From each according to his ability” (that’s you and your hard-earned assets, my friend), “to each according to his needs.” Anybody recognize the quote?
Yes, Barack Obama honestly believes that someone else’s need—even someone you’ve never met, living half a world away, and guilty of the most profligate misuse of what little assets he had—is a legitimate claim on what you have. It’s called socialism, my friend. Get enough important people to support it and you can call it something that sounds a lot better—like international assistance, or maybe the New World Order.
I could go on for pages, but I think you get the point. Just in case you don’t, let me end this diatribe with a very interesting quotation that reveals exactly what our financial masters have in mind for us.
This one comes, believe it or not, from the Wall Street Journal a couple of weeks ago. The editors gave Robert Reich, the former Secretary of Labor under Bill Clinton and one of Washington’s ultimate Insiders, nearly 200 inches of prime editorial space to tell us dummies what is really going on. Here’s what the stalwart Keynesian had to say:
“Look at President Obama’s budget proposal, spending freeze, jobs bill, stimulus, tax hikes on upper-income individuals, and proposed deficit commission. Also take a look at the fees he wants to impose on the biggest banks and his proposed regulation of Wall Street. Look at his stalled trade agenda. Now, explain the big picture.
“If you’re about to write, ‘more taxes and more spending,’ you’re either not thinking hard enough or you’re a Republican running for office this November.’”
Or, Bob (do you mind if I call you Bob?), you could be a Straight Talk reader who sees through all of your eloquent BS. You may be smart as a whip. But you’re not so clever that we can’t spot the baited hook that comes next:
“To see the big picture, you need to keep your eye on three big things. The first is the extent of government spending needed to offset the continued reluctance of consumers and businesses to spend.”
To read the rest of this folderol, see the complete article in the Feb. 5 issue of the Journal. Somebody in the editorial section must have a pretty good sense of humor, because the piece right next to Reich’s ramblings had the headline, “Washington vs. ‘Common Sense.’”
I’m sure I’ll have more to say about all of this in subsequent columns because the news won’t be good, my friends. The people who make monetary policy in the EU, like the ones who control the purse strings here, believe they have been endowed by their creator with the unalienable right to take your money to spend on projects they want, but know you abhor.
Welcome to the Brave New World of the socialist utopians. All it will take to make it work is your freedom and your wealth. Forgive me for pointing out that Barack Obama and his progressive friends think that’s a very reasonable price to pay.
Until next time, keep some powder dry.