Madness is the real 'contagion' in Europe

When European financial commentators talk about "contagion," what they mean is the domino effect of a Greek default spreading to encompass big banks and other nations like Portugal and Ireland.

But the real contagion will be madness demonstrated by ordinary citizens who refuse to grapple with the loss of their government benefits and, more fundamentally, the realization that the free lunch is over. It is nothing less than a loss of faith in social democracy.

The Greek parliament is set to vote on a property tax increase that will make middle class living a distant memory for many. People in their thousands are demonstrating against it. Except, if the measure fails to pass, the Greek's debt holders and the IMF will not release another $11 billion increment in the bailout scheme agreed to last July. This will result in a "hard default" where those bondholders are likely to get little or nothing on what's owed them and the government won't be able to meet its payroll obligations (one in five Greeks works for the government).

Reuters:

"The decisions of July 21 are like an institutional Bible to us," Finance Minister Evangelos Venizelos said, underling his commitment to meet the targets of a new bailout deal agreed this summer. "They are the framework within which we move."

But ordinary Greeks are exasperated at more austerity misery. Bus drivers and metro workers launched a strike to protest against the measures on Tuesday with tax collectors and some Finance Ministry officials starting a 48-hour stoppage.

A column of garbage trucks and city workers on motorcycles drove slowly in front of parliament honking horns in the ancient capital's Syntagma Square, where about 100 people were injured in bloody clashes between protesters and police in June.

At the other end of the square, hundreds of activists waving banners saying "No New Cuts!" and chanting "Take Your Bailout and Go Away!" marched on the Finance Ministry, which was cordoned off by riot police, where Venizelos was speaking.

Having grown increasingly impatient at the slow pace of reforms, a "troika" team from the IMF, EU and European Central Bank abruptly quit Greece this month threatening to cut off funds, prompting Athens to unveil an intensified strategy.

After Venizelos held talks with officials at a weekend IMF meeting in Washington, sources close to the troika said the team would return on Wednesday and resume the work of scrutinizing Greece's fiscal books to approve the latest aid tranche.

Like the dinosaurs seeing the comet hit but not understanding its significance, the Greek people - and soon, the people of other countries from Portugal to perhaps even Italy - know they're in trouble but fail to see why, or how much their lives will change as a result of living beyond their means for decades.

Take note. Yes it can happen here - and probably will.


When European financial commentators talk about "contagion," what they mean is the domino effect of a Greek default spreading to encompass big banks and other nations like Portugal and Ireland.

But the real contagion will be madness demonstrated by ordinary citizens who refuse to grapple with the loss of their government benefits and, more fundamentally, the realization that the free lunch is over. It is nothing less than a loss of faith in social democracy.

The Greek parliament is set to vote on a property tax increase that will make middle class living a distant memory for many. People in their thousands are demonstrating against it. Except, if the measure fails to pass, the Greek's debt holders and the IMF will not release another $11 billion increment in the bailout scheme agreed to last July. This will result in a "hard default" where those bondholders are likely to get little or nothing on what's owed them and the government won't be able to meet its payroll obligations (one in five Greeks works for the government).

Reuters:

"The decisions of July 21 are like an institutional Bible to us," Finance Minister Evangelos Venizelos said, underling his commitment to meet the targets of a new bailout deal agreed this summer. "They are the framework within which we move."

But ordinary Greeks are exasperated at more austerity misery. Bus drivers and metro workers launched a strike to protest against the measures on Tuesday with tax collectors and some Finance Ministry officials starting a 48-hour stoppage.

A column of garbage trucks and city workers on motorcycles drove slowly in front of parliament honking horns in the ancient capital's Syntagma Square, where about 100 people were injured in bloody clashes between protesters and police in June.

At the other end of the square, hundreds of activists waving banners saying "No New Cuts!" and chanting "Take Your Bailout and Go Away!" marched on the Finance Ministry, which was cordoned off by riot police, where Venizelos was speaking.

Having grown increasingly impatient at the slow pace of reforms, a "troika" team from the IMF, EU and European Central Bank abruptly quit Greece this month threatening to cut off funds, prompting Athens to unveil an intensified strategy.

After Venizelos held talks with officials at a weekend IMF meeting in Washington, sources close to the troika said the team would return on Wednesday and resume the work of scrutinizing Greece's fiscal books to approve the latest aid tranche.

Like the dinosaurs seeing the comet hit but not understanding its significance, the Greek people - and soon, the people of other countries from Portugal to perhaps even Italy - know they're in trouble but fail to see why, or how much their lives will change as a result of living beyond their means for decades.

Take note. Yes it can happen here - and probably will.


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