PIGS and a Turkey walk into a bar expecting the Turkey to pay. Portugal, Ireland, and Spain (we already know what happened to Greece) are nearly broke. Just two months earlier the European Union, who must take their nightly pints seriously, announced Ireland’s banks were sound. Oops, that must have been another global entity with leprechauns and fairies. Spain’s over building (sound familiar?) has crushed their financial institutions.
The first call for help is to the European Union for bail money,
so they can continue to run their countries. No! Cry the soothsayers. Let them fail! But if a county goes bankrupt, the unsuspecting hard working citizens could be without a basic infrastructure. Taking away police, sanitation, water, fire and ambulance support would bring chaos, as it almost did in Greece.
So what is the big deal? This is happening half a globe away and is a miserable 10 hour flight in novice class. Well boys and girls, it looks like some of our money market funds are invested in Spanish Banks. It is whispered some of our “too big to fail” banks may have some of their cash in the ailing financial institutions as well.
According to Bloomberg.com Uncle Sam opened his pocket book during the 2008-2009 crisis to banks throughout Europe dolling out over 900 billion dollars. Big sister Germany, circumvented the global recession due to their strong exports, (anyone here drive a BMW?) but it turns out that Bayerische Motoren Werke also was given some of USA’s cheap money to the tune of 3.8 billion dollars.
What can a country do to raise money? Increase taxes on necessities like utilities or gasoline? That could cause the natives to riot. Put the squeeze on corporations for more bucks? Mexico is really nice this time a year, and some would rather dodge bullets than pay more taxes. Bundle bonds and force local investors to believe in their country? Like that is going to happen. Or cut our mortgage tax credit that is currently being bantered about in Washington.
And who is the Turkey? Why, Uncle Sam. He might try closing down the open bar and stop getting the world drunk on our almost free money. Or we could all be drinking boxed wine (except for the banks, of course.)
