"Economists are pessimists: they've predicted 8 of the last 3 depressions."
--Barry Asmus

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Sunday, November 28, 2010

PIIGS! What's The Matter With PIIGS Today?

What the devil's wrong with these PIIGS today?
Who could guess the they would turn out that way!
Why can't they be like we were,
Perfect in every way?
What's the matter with PIIGS?
What's the matter with PIIGS?
What's the matter with PIIGS today?[1]

Plenty. That's what.

The European Union and the IMF have given up on getting Greece to abide by the timetable it originally agreed to when it borrowed 43% of its GDP. Originally, they were going to get 6 years to repay 110 billion euros in loans. Now, the EU and the IMF are getting ready to push it back to 11 years. Somehow, Paul Thompson (the IMF official in charge of the Greek bailout) believes that
"This (the extension) would give markets the signal: 'Don't worry about the repayment of the 110 billion euros, this is not going to affect your claims'."
I'm going to segue off into my own sordid past for a few moments, and reveal that I spent 9 months working as a credit card collector[2] for a (different) company not-to-be-named.

What does this have to do with anything? Well, when we set up a payment program that extended out the amount of time the debtor had to make payment in full, that was good for the collector. We got bonus points for "saving" the debt each month for the duration of the program.

But, when the program was over, we fully expected them to be in debt still. Because all it did was delay the problem.

Now, I know that this is inductive reasoning and potentially flawed. There are differences between household debt and sovereign debt[3]. But I don't think that, in this case, they're all that different.

Meanwhile, Ireland is set to sign the loan papers for an 85 billion euro bailout. Tens of thousands of Irish took to the streets to protest this, and it is fully expected that this will mark the end of Prime Minister Brian Cowen (of the increasingly appropriately named Fianna Fail party). As Prime Minister, that is. The protests aren't that violent yet. Not like Greece, where protesters showed their displeasure with the bailout by murdering three bank workers who had nothing to do with it.

Oh, and in non-PIIGS news, the apologetic North Korean government has put surface-to-surface missiles on the coast of the Yellow Sea.
"We will deliver a brutal military blow on any provocation which violates our territorial waters," KCNA said.
For purposes of understanding North Korean press releases, "provocation" is defined as:
  1. anything looking at us
  2. anything that the crazy man in the seat of power thinks might be looking at us
  3. having a bigger dick than the crazy man in the seat of power
  4. being something that the crazy man in the seat of power thinks might have a bigger dick than him
  5. breathing
So, yeah. I don't think there's really anything left to say about this that hasn't already been said.

[1] I now owe Lee Adams an apology as well.
[2] Feel free to hate me now.
[3] Truly staggering dollar amounts, for one thing.

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