Whether you are an individual or a nation, you can only go on borrowing and spending above your means for so long. - and it looks like Greece, failing a further bailout, just hit the so long point.
The Detroit News: Greece to miss IMF debt payment and bailout to expire
If you look at the EU as a monetary union it never made a lot of sense, as the countries involved pursued radically different economic policies without a centralized control and countries ignoring poicy agreements and debt spending limits willy-nilly. Thus the tension today.
Hard working, parsimonious Germans set to retire at 67 are tied monetarily to, and paying for, spendthrift Greeks retiring at 50 on full government pensions.
After all, the Germans are rather fed up with bankrolling a Greek economy (and other problem European economies) that constantly spends more than it creates and exists mainly to provide feather-beds for state workers.
For example, the Greek railway system's debt is a rather stunning example. Greek rail has losses of over 1 billion against its $250 million income, each year, in, year out. This is, of course, completely unsustainable.
That Hellenic railway debt, at 5% of Greece's annual GDP isn't even counted as part of the Greek government's debt obligations causing the current crisis. But, as a state guaranteed entity the debt will fall on the state and add to its total debt as there's no one else to bail out Hellenic rail. Think Freddie Rail.
Now it looks like Germany and France will have to bail out the Greek's and Italian's profligacy or the whole Euro experiment, along with a few banks invested in PIIGS' bonds may collapse.
So a European Monetary Union isn't working out too well as it runs out of money.
However, if you think of the EU not as an economic union but instead as a union with a twofold purpose -
1. To constrain Germany and end its 50 year cycle of occupying France and
2. As a vehicle for reparations for World War 2
Then it all begins to make some sense.
Germany has been prevented from its natural pattern of kicking the French hither and yon, and has also been admirably restrained in not marching through Belgian territory on its way to to do so. Likewise, German tours de force of Eastern Europe have also ceased.
Goal #1 has been a rousing success.
Goal #2, The Euro as German reparations vehicle also seems to be promising.
After all, the Versailles reparations initially demanded were 785 billion in today's dollars, reduced down to $81 billion after the Lausanne Conference Treaty.
Today, Germany is going to be paying much more than that, and has already committed to $287 billion to the bailouts with likely further contributions to a 2 trillion big PIIGS bailout fund being necessary to make a full bailout.
Goal #2 looks to be well on the way to succeeding.
So who gets to be the one to tell the Germans that the European Economic joke is on them?
Pronounced Ochi, this day commemorates the response of the Greek Prime Minister Ioannis Metaxas to Benito Mussolini's ultimatum that Greece allow Italian troops to enter Greece and occupy areas of the country.
Metaxas replied with one word: "Oxi" (No!).
Like the famous and later to be spoken "Nuts!", the simple word Oxi demonstrated resolve and the courage to resist against superior forces.
Italy then invaded and to the surprise of all, the Greeks proceeded to demonstrate how a larger and superior army on paper can get its butt kicked by a determined and competent, yet smaller and worse equipped, army.
Indeed, after being invaded not only did the Greeks proceed to stop the Italian attack cold, but they then proceeded to drive the Italians out of the country. The Greeks then kept chasing the fleeing Italians and even took over a quarter of Italian-occupied Albania.
It took the intervention of the German army to finally push back the Greeks and cause them to be occupied.
It is thought by many military historians that the resulting need to use German forces to invade Greece, along with the delays and tie-down of German troops imposed by the Serbs during the Nazi invasion of Yugoslavia caused the postponement of the German invasion of Russia. The delay meant the Germans were to face not only Russian troops but also the great Russian general Winter and give the Russians time to regroup and defend their territory. Thus the Greeks and the Serbs with their valiant resistance changed the course of the Second World War.
