George Rebane
The Greeks are rioting in the streets again. They don’t like the new tranche of austerity measures that their parliament was forced to levy on the country. This was in response to the northern eurozone countries imposing more conditions before giving Greece its next bailout check of approximately $170B in March. The north, led by Germany, is keeping a wary eye on Greece to see if these austerity measures will be made to stick.
Greece’s big unfunded liability is of the same stripe as ours – entitlements that range from public employee pensions to healthcare. We recall that in Greece one out of four workers is unproductively employed by the government. And up until now, the parliament doesn’t even want to put public sector pension cuts on the table.
The markets in Europe and America are acting insanely as they digest the daily dribble of news from Brussels and Athens. ‘Are the Greeks going to make it? Well maybe, and then again, today it doesn’t look like it.’ My long held view that Greece will tank is getting more certain by the day. There is no hint that with the March check, the Greeks will be any closer to financial stability than they are today. They’ll use that cash to service their national debt, make government payroll and pension payments, and buy time in dickering with their bond holders to take a 50% haircut. But none of this will put the country on to a path of fiscal recovery. After the March check, they’ll start rioting for the August or September check.
As a political and finance junkie, I keep asking myself as to who benefits from this silly dance with the foregone ending. The only answer I have been able to cobble together is the ruling elites and the rich guys. They are buying time to get their finances rearranged, relocated, and redoubted (hidden in places their governments can’t get it, see nearby chart). So when it finally hits the fan, and spreads from Greece around the European shore of the Mediterranean to the northern countries, the remaining visible wealth of the smart people will be small enough to surrender without really affecting the quality of their lives. The delay also gives the clever people time enough to get out of Dodge, whether that be a political office or country of residence.
Countries like Switzerland have been the monetary redoubt for the smart and wealthy for generations. But now that security is being breached by developed nations led by the US. The Swiss are now the prime target of big countries who want to know who of their citizens have how much squirreled away where. While the Swiss and others are putting up a fuss to the likes of America, they have no intention in getting out of the numbered bank account business for the rich of the less developed and muscular countries. From these countries it is still easy to pull profits from your nation’s natural resource sales, or even foreign aid from idiots in America, and get it into your secret accounts on some ‘El Dorado shore’.
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Pay Gaps and System D
George Rebane
Frankly, it’s a bit eerie how the events long predicted on RR are ticking off as recently having happened, or about to happen. Here I want to focus on the infamous pay gap of the American worker, and an economic activity that is hard to track, but globally significant.
Income comes in two forms – wages and profits/interest. As has long been argued here, the pre-Singularity years are illuminated by worker productivity abetted by screaming technology advances. Using new gizmos and software, today a worker can make more and/or service more per unit time than yesterday, and even more tomorrow. Given that the size of the markets requiring new stuff and services is not growing as fast as productivity, the result should be predictable for people who think.
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