As Molotov cocktails are being thrown in the streets of Greece, the three-headed monster of Papandreou, Sarkozy and Merkel clings to the belief that the road they travel is the solution to the crisis.
Over the past decade it has been the bankers’ understanding that if they are successful in their transactions, they keep the spoils and thus large bonuses for everyone- everyone who is bankers that is.
However, if a financial engineered product goes awry or unsustainable debt is created, then of course, the banker is not held responsible.
The loss is laid off on either the depositor or the taxpayer.
A nice system for the select few and it’s this system that has become entrenched worldwide, until now.
The Greek solution is really quite simple. First, default on all bonds.
Next, withdraw from the European Union, recreate the Greek currency and start to crank up the printing presses.
Losses will certainly be dramatic as holders of Greek debt will receive not 79 cents on the dollar, as agreed upon in July, but zero.
This stops the unsustainable interest expense that continues to drain the country’s treasury.
By withdrawing from the European Union, Greece will no longer be tied to the euro and can start printing the drachma, which of course will be worth less than both the dollar and the euro.
By devaluing their currency, both goods and services will be cheaper in Greece than in other countries.
This action should at the very least create dramatic tourist demand.
By increasing tourism, many people will be put back to work, from hairdressers to tour guides. Of course, a flat 15% tax should be imposed and collected on everyone.
Okay, we’ll make it 10%.
Coupled with a value added tax, the income stream should be able to meet the country’s demands.
It is not the adjustment in legacy cost that drives people to the streets; rather, it’s the concept that somehow the special few are entitled to guarantees.
This has nothing to do with taxing the rich.
It’s merely the idea that the risk taker should be able to enjoy their success, but they must also bear the brunt of their losses.
A theory that Sarkozy, Merkel and Papandreou (even Obama, Bernanke, and Geithner) will ultimately be forced to accept if there’s any hope for the future.
John Ransom | Create Your Badge
Twitter http://twitter.com/#!/bamransom -See more top stories from Townhall Finance. New Homepage, more content. Be the best informed fiscal conservative.
Join the conversation as a VIP Member