How the Euro weeds out the losers

Greece is astonishing. The country's economy is in the tank and sinking fast to the bottom, where it belongs anyway. Yet Greek unions somehow think the bonanza isn't over and have called a wave of massive strikes that have already crippled fuel supplies and will cripple the whole country beginning tomorrow.

Ports, borders, transport and tons of public services will all be shut to protest the austerity measures the Greek government is offering in exchange of an EU bailout. The economically savvy union leaders believe that imposing what amounts to an embargo on their own country will force the government to back down and return to spending lots of money.

They just don't get it, from leader to member. There's no money, their country's word on debt is junk. What is the EU doing discussing a bailout when the populace seems so oblivious to the basic rules of common sense?

Let them fail. Countries have defaulted before and survived. Greece, Italy and Spain are incapable of reforming when asked to. The purse strings need to shut tight and throw these spending junkies into the gutter. In the past the government simply leant on the Central Bank to devalue the currency, defrauding its investors.

Well, the party is over. Accountable to the ECB, Greece must now face the music. It should be made an example of, for all of Europe to see. A government's good intentions don't matter if the voters remain so obtuse. It's time for them to feel the hit. Maybe, just maybe, they will begin demanding fiscal responsibility from their rulers in the future.

Bailout pothole

Despite the CBC and many of its commenters being biased to the liberal side, one useful way of probing public opinion is ranking the comments by "Most Recommended".

Read the story on the stillborn auto bailout for Ontario and you'll know the Tories are in for a nasty shock if they go through with the cash handout. You don't need to be logged on to CBC to recommend a comment, and despite the obvious allegations of double voting et cetera the top 20 comments being all explicitly against the bailout does ring a few bells. Many of them are also hostile to the trade unions.

Tories, drop this bail-out nonsense. The US side isn't delivering, and their unions are hostile to making any concessions. It isn't going to go through, and Canadian taxpayer dollars will be wasted.

My suggested course of action would be to strike out the bailout language and go through the banks. Have a board of bankers examine a regular loan application, and if they give the green light forward the banks the money to cover the commitment, with the banks themselves footing a proportion of the bill (15%, say). Otherwise we'll be seen as ready to squander money and go into the red. Not Tory-style, not cool, not wise.

Deficit coming - Duh!

Deficit predictions keep appearing like mushrooms in virgin woodland after a big storm, but most people endowed with the gift of common sense will just shrug and say "Duh!". The world economy is chin-deep in stinky goo, and solid economic foundations don't help you avoid trouble when your major customer is going down the tube and your major natural resource sheds 60% of its value almost overnight.

Who are we kidding? The progressives at the Centre for Policy Alternatives may well predict a 50 billion deficit, but anyone worth their salt will figure these guys are on crack. Being good at predicting surpluses is easy, as any government budgets conservatively. Predicting deficits involves coming off the high and sparing a thought for the government's future actions. If auto bailouts and massive "social justice" programs are included in these warped figures then we could well run a 50 billion dollar deficit. However this is no New Deal and there's no big spending party in government. Thank God!

Now we hear that trade unions will have to stop playing omnipotent and accept conditions before a bailout gets in the works. Tony Clement has the guts to say it and he's damn right. The trade unions and their perpetual strife for laziness are part of the equation that brought the demise of the auto sector. If the government has to tighten its belt, so do union bosses. Right on!

There's rumors of an additional 300-billion rescue package in the works south of the border. That adds up to the 700 billion already sent down the drain, making the total exceed $1 trillion. That's more than is required to pay off an entire year's worth of negative US balance of payments. Canada isn't going down that route, we're demanding change for cash and we'll get it.

Wishful thinking aside, running a deficit now is almost inevitable (chapeau to the Tories if they manage to break even). How big the deficit is will depend on how bold the government thinks it can be. When things get tough it's easier to push for structural change, because many inefficient organizations have close to nothing to lose (they've been wiped out) or, conversely, too much at stake (they could go bankrupt with a thud). Do we break the hair knot that hit the comb or do we just grease it up?

We'll run a contained deficit, and if we accompany it with a sound economic restructuring plan and a detailed cash flow forecast we can still show responsible management instead of the Grits' mercurial just-plug-holes approach. Even big companies are sometimes short on cash, it's normal if you know how to manage it. What's the fuss?