Mankind differs from the animals only by a little and most people throw that away.
Confucius, BC 551-479, Chinese Ethical Teacher, Philosopher
The last meltdown was caused by the financial crisis in the United States, which was triggered by the onset of the housing and mortgage crisis. We now have the potential for a full blown currency crisis to unfold. Greek debt has been reduced to junk status and both Spain and Portugal have had their ratings lowered. This is going to make it much harder and more expensive for these 3 nations to borrow money, especially Greece and rightly so. The next in line could be Ireland or Italy. The UK is also another time bomb waiting to explode. If Spain runs into the same problems that are now facing Greece, the fall out could be extreme. The amount of money necessary to bail out Spain would be significantly larger and the EU block might not have the capital or the stomach to fund such a huge bailout. Thus it is imperative that they take a stand now and send a strong message to other stragglers: fix your house or burn.
The PIIGS share a common trait with many States in the US, especially California, New York and New Jersey; they all continue to borrow more money than they earn and no one at the top has suffered any consequences pursuant to these actions, at least not yet. There is also one big difference; all US States must balance their budget every year. This is done by raiding some funds or cutting benefits, cutting work hours, or firing workers, etc. Whatever is necessary is done; though in the long run you cannot put your house in order by spending more and cutting programs. Eventually there will be nothing left to cut, and you move from the fat, to the muscle and finally to the bone.
The Greeks took things one step further, they blatantly lied about their finances and continued to spend like billionaires, when, in fact they were not even millionaires. Living like a king on a soldier’s salary is a recipe for disaster. The simple solution would be to let them fix the problem on their own or allow them to default and fling them out of the EU. Short term this will be very painful but long term it will strengthen the…
