Pots and Kettles and Name Calling, oh my!

It's been a while since I really railed on the world. Let's see how this one goes over.

Now this blog has contained a good deal of commentary and analysis on the global financial crisis (GFC for you anagram-philes out there). I remain critical of current U.S. policy and its vacuous leadership. But overall, the red, white & blue will extricate itself from the situation better than many.

Part of this is due to the fact Americans are bitchy moaners who drag every disagreement into the public realm for endless debate on legitimacy of opposing facts and courses of action. This heart-on-sleeve style can lead to Chicken Little demagoguery on subjects real (health care policy) and imagined (anthropomorphic global climate change).

But the facts sort themselves out in the bright spotlight. And John Q. Public's voice is ultimately heard by leaders in D.C. who courageously follow polls toward a path of wisdom.

Back to the GFC and the rest of the world. Lately we have the crisis in Greece destabilizing the Euro to the point of potential dissolution. Their situation is bad. It screams for austerity and outside relief.

Unfortunately, Greek public service unions refuse to consider pay cuts, benefit reductions, or the possibility of retiring later than 58 years old. Creditor nations like Germany (where retirement is age 67) are loathe to use their taxes to support such profligacy and death-grip clutching at straws. It recently came to light the Greek government got Goldman Sachs to create off-book debt to make it look solvent...and be able to get more loans. Not seeing the incentive to help here.

Worse, whatever the EU's response, it only sets precedent for the rest of the porky PIGS -- Portugal, Italy and Spain -- all larded up on public debt, out-sized welfare systems, and unsustainable demographics. These dynamics -- rich state-poor state / many lazy sods-few hard workers / beggar-borrower-king / old-older-really really old -- threaten to tear EMU to shreds. I still haven't gotten that apology, Klaus. You either Jean-Claude.

And then there's China. The big, bad, fire-breathing dragon getting more belligerent in response to decayed U.S. finances. As if it had nothing to do with our situation. True, they support our finances by buying all our debt. But they were the ones who led us (willingly) down to Hell.

China is like a crack dealer who first entices a smart but malleable 7th grader with a free "taste" of unbounded pleasure and a life free of worry, then hooks him in and watches the kid waste from A-student into gutter-dwelling wretch.

So to is it with China's exports to the USA -- all made possible by a captive, inexpensive workforce uninsured by legal, health, safety or retirement protections -- and an artificially devalued currency. At first their stuff is free. Then it's cheap. After awhile, addiction takes hold and the cost to the user -- physically as well as financially --becomes impossible to maintain.

But in the case of a drug dealer he can always, uh, cultivate new clientele. China has no such option. It has built its mammoth enterprise on a single, very large addict. He goes down, you go down. Bad business strategy, Wang.

To top off that situation, it turns out that China has a burgeoning public debt problem of its own. See, somewhat counter intuitively, all those dollars flowing into the country over these many years simply encouraged the provinces and municipalities to bet on the come, err, take loans in which to invest in infrastructure, plant, and equipment. New loans are being taken to invest in rising property values, further pumping up property values.

Any of this sound familiar?

So now the prediction is China will have a debt crisis of its own within a couple years!

Then we'll begin to see how those millions of unemployed young men, spoiled as "little princes" growing up, without girls to marry handle the servitude into which they've been born in tacit exchange for an ever rising standard of living. Or how the sclerotic Communist government controls a huge & pissed off citizenry in the age of instant information. Damocles is no doubt still smiling...

No one in any of these situations should point anywhere other than their nearest mirror.

Except me.

Have a nice day.