Sunday, May 2, 2010

It's all Greek to Me

So they reached an agreement to fund Greece's debt to the tune of about 150 Billion Euros.  Krugman says that should be sufficient, and a sovereign default is likely to be avoided.  I'll take him at his word.  Me, I'm more interested in the reaction of the average Greek-in-the-street.  And in the streets is pretty much where we're going to find him.

At some point, due to political cowardice, a dysfunctional legislature and a delusional, illiterate electorate, the US is going to default on her debt.  This will happen in the middle future, perhaps 2020 or 2025, but it will happen.  Why?  Because no effective action is politically possible in the US until it becomes an overarching crisis, requiring immediate and massive action.  That's just the way we roll here.  USA!  USA!

Um, anyway, yeah.  Sovereign default.  What happens is you get funding and an opportunity to "restructure" your debt, but the people providing the relief will insist that you do things that protect their investment.  Not your people, not your democracy, not your sovereignty, THEIR money.  And you agree, because if you don't take the deal you're stuck with NO ability to borrow money, and everything just grinds to a halt.  And that's even worse.

But, as you've been told ad infinitum, Americans are a special people.  They've been cheerleaders to a foreign policy of exported violence on a large scale because they've never had tanks in their neighborhoods, firefights in their schools, and death squads in their homes.  They don't understand the local consequences of things like air strikes and SpecOps raids, mass detentions and political prisoners.  This is the same thing.  Americans will want the international monetary support, but they will be unwilling to accept the concomitant rule set.  Once again, they will demand the funding without the austerity commitments.  But this time, they won't have the option to insist.

When the US goes into default, the nations and agencies providing the funding to keep the government afloat are going to insist that the US get her financial house in order.  That means bringing home the troops, shutting down the empire, ending the subsidies, curtailing the support for all sorts of programs.  For the first time in memory, the American people are going to have to make it on what they do, what they produce, what they actually contribute.

Will it be a problem?  We'll have to see, because it's an irreversible course at this point.  We might learn a great deal from the Greeks, and the Portugese and even maybe the eternally sunny Spanish.  What level of depredations will they be able to force their people to swallow before blood runs in the streets?  Is there breathing room between what the IMF and the Eurozone requires and the violent collapse of the Grecian state?  Will the suffering be just enough, or will it tip over into something people who have come to expect a certain level of services are simply not willing to accept?

Because I can tell you this.  Americans will accept all manner of draconian government edicts, from torture to warrentless wiretaps to extra-judicial murder.  But they will NOT accept you telling them there are things they can't buy, and there are things they are simply going to have to do on their own.  And unlike Greece, in America there's that small matter of half a billion firearms just floating around.  When Americans get scared and hungry, blood is going to flow in a way we've just never seen before.  Think Rwanda with SUVs and machine guns. On the other hand, the rest of the world might very well welcome this outcome....

1 comment:

  1. The impending US default is nightmarish enough in & of itself, but worse is that it looks like it will occur at a time when all that missing capital is sorely needed to deal with other crises that've been left in the "To Do" box for far too long.

    "For the first time in memory, the American people are going to have to make it on what they do, what they produce, what they actually contribute."

    Uh oh.

    I'm not sure the world really has that big an appetite for Keyboard Cat videos.