EU gave alcoholics key to liqueur store

Kyle Smith:

This island off the course of northwest Europe is turning out to be an excellent viewing platform for three blockbuster shows this summer: Queen Elizabeth’s 60th anniversary Jubilee, the London Olympics and the implosion of Europe. 

The group of countries using the euro as a joint currency is “a burning building with no exits,” says Britain’s foreign minister William Hague. The Europeans with flames lapping around their ankles are the Greeks, but the whole continent is about to feel the burn. 

Yoking most of Europe together with a single currency has proved as unstable as Napoleon or Hitler trying to lasso it with a single army. The euro project was doomed from the start, when the expert economists and Ph.D.s and we-are-the-world Eurocrats almost unanimously agreed that pushing through monetary union without fiscal union was a sound idea. It turned out to be like giving alcoholics the keys to the liquor store.

Panicked Greek voters, who haven’t been able to elect a government with a working parliamentary majority, are about to have a second round of elections in June. The most popular party in polling is the far-left Syriza outfit, led by a 38-year-old former communist named Alexis Tsipras, who has labeled Greece’s latest bailout and austerity package as “criminal.” 

If he takes over, he vows to default on Greece’s loans, launch a new spending spree and dare the Eurozone to throw his country out. That would cause or, more likely, be preceded by, a run on Greece’s banks as Greeks hoard euros against the inevitably weak drachmas that would replace them. 

On Monday, Greeks withdrew $900 million from their bank accounts. “Of course there’s no panic,” said Greece’s figurehead president Karolos Papoulias, “but there’s great fear which can evolve into panic.” Somebody give this guy the award for least-reassuring reassurance of the year. 

Almost as non-reassuring is the comment of Paul Krugman that this isn’t a “bank run” but a “bank jog.” And we all know jogging is good for you. 

How bad are things in Greece? Syriza has no plan to pay for its fantasies — wiping out its debts wouldn’t mean Greece magically had enough funding to pay for obligations going forward — and Germany has repeatedly said it will continue to fund Greece only if it will continue to cut back on its bloated government spending while enforcing serious tax hikes. The Greeks want to stay in the euro (by a margin of 78% to 12%), and they want to go back to spending freely. They cannot have both. What looks like “draconian austerity” right now is going to look like a sunny day on Sifnos compared to what’s coming.

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There is much more.

You don't need to be in the UK to see this mess.  You can see it from Washington, Texas.   The Greeks are a country of tax evaders and public employee laziness.  The employees can retire at 50 and live off of money the state borrows because everyone is evading taxes.  You can only do that for so long before the bankers notice.  The current suggestion for solving this problem is to spend more money hey do not have.  And, if the default on their debt, who do they expect to borrow money from?  Greece does not need a tax hike.  It needs to collect the taxes that are owed.  Perhaps if it had a lower rate, it could collect more.