Of course, I am kidding about a theme song being appointed – but I DO have a song to nominate. Before we get to that, let’s review what happened. In a nutshell:
1. Greece spent too much money
2. Greece has too many government workers who get pissed off when the government tries to cut the budget (and ergo their pay).
3. Greece borrowed the money to pay their bills and built a large debt load. They got to the point where they no longer could pay off their debt AND they can NOT print money like the US can.
4. The EU monetary authorities told Greece to develop an austerity plan – i.e. cut expenses and raise taxes to balanced the budget. Before-mentioned government workers rioted, politicians began firing off ridiculous charges (e.g. Germany stole our gold in WW2, that’s why we’re broke). It looked like Greece might not accomplish this so interest rates in Greece exploded.
It looks like the rest of Europe will bail them out – likely through money printing (the Fed may even be contributing through the IMF – great! AIG AND Greece get freshly printed money! As they say, birds of a feather…).
Here is some background reading courtesy of Bloomberg:
Greek president begins “austerity pitch“
NYU professor Nouriel Roubini says Greece will be followed by more defaults
Professor Martin Feldstein video on Greece leading to more defaults
So what do we take from this? We must celebrate somehow. And since the problems will continue with Spain, Ireland, Portugal, maybe Italy, then the UK and eventually Japan (which has MASSIVE debt – they’ve been doing bailout and stimulus packages since 1989), much more money will be printed – and much higher inflation should be expected (and perhaps government workers in the US rioting?). That will likely be bullish for precious metals. With that said, here is our new theme song for 2010 to celebrate sovereign bailouts via money printing:
Can’t wait til it happens here! 🙁