Friday, October 31, 2014
1012 C Street  •  Floresville, TX 78114  •  Phone: 830-216-4519  •  Fax: 830-393-3219  • 

Lost & Found

Lost: Black female Chihuahua named Gloomy and black male Chihuahua named Rico, from CR 126, Floresville, missed dearly by their family! Call 210-428-3803. 
Lost Black Manx Cat (No Tail) in La Vernia, Country Hills. Short black hair easy to identify with no tail. Call Diane or Pat 830-253-1235

VideoLost: Golden/Pyrenees mix dog, Kaiha, last seen Oct. 11, Hwy. 119, Denhawken area, wearing collar (Drama Queen). Please help us find her! Call Billy 210-745-6059.
More Lost & Found ads ›

Help Wanted

Salesman, $60K annual earning potential, no experience required, 9 a.m.- 7 p.m. Monday-Friday, Holiday Motors, 914 10th St., talk to Virgil, 210-389-4898.
We are looking for part-time energetic team members for growing gas station outside of La Vernia, duties to include cashier, food prep, stocking (must be able to lift 45 lbs), must be able to work days, nights, and weekends as schedule will vary. Contact Cynthia at 87ih@aiemail.net or apply in person at 87 Ice House, 6517 U.S. Highway 87, Sutherland Springs.
More Help Wanted ads ›

Featured Videos





Video Vault ›

Commentaries


Short-Lived Euphoria in Europe




E-Mail this Story to a Friend
Print this Story

Disclaimer:
The author of this entry is responsible for this content, which is not edited by the Wilson County News or wilsoncountynews.com.
November 2, 2011 | 1116 views | 1 comment

Thursday, Oct. 27, 2011, was a giddy day for European politicians and global investors. European Union officials announced a plan for addressing the EU’s worst financial problems. There would be a partial write-down of Greek sovereign debt--a 50 percent haircut for private bondholders, but no haircut for governmental creditors (the political class looks after its own). In addition, EU officials unveiled a one-trillion euro (approximately $1.4 trillion) bailout fund purportedly to recapitalize European banks and insure against sovereign defaults.

Stock markets on both sides of the Atlantic soared on this news. Euphoria reigned--for a few days, that is. Just three trading days later, markets gave up all of the previous Thursday’s gains and pessimism returned.

Two events in particular have precipitated this manic mood shift: Prime Minister George Papandreou announced that he will submit the EU bailout plan to a national referendum, and the financial firm MF Global Holdings, which had placed a heavy bet on European government bonds, has declared bankruptcy.

Even if these two Halloween surprises hadn’t spooked the markets, the viability of the EU bailout plan was in doubt anyhow.

Europe’s financial problems are immense and intractable. Greece is the focus of attention, but when you realize that Greece’s national debt is around 350 billion euros--its entire GDP is only about 225 billion euros, which shows how hopelessly broke the Greek government is--and the announced bailout fund was for one trillion euros, you can see that most of the bailout fund isn’t for Greece.

Spain and Italy combined are almost three trillion euros in debt and run chronic budget deficits. Significantly, since the bailout plan was announced, interest rates on sovereign Spanish and Italian debt have risen, indicating widespread skepticism that the bailout fund (if it materializes) would buy sufficient time for those governments to get their financial house in order.

While detailed specifics about the bailout plan are vague, cautious skepticism is prudent--for two major reasons:

First, where will the vast sum of one trillion euros of bailout money come from? Certainly, no European government has that kind of money set aside for the proverbial rainy day. Even Germany, the undisputed economic leader of Europe, has a national debt of 70 percent of its GDP and is limping along with a one percent growth rate.

Bailout funds would have to come from a combination of creative forms of monetary inflation and clever financial and accounting engineering, much of it using more of the leveraged gimmicks that already have made both Europe’s and the United States’ financial systems so stressed and vulnerable.

Second, how realistic is it to expect all EU member states to finally start to abide by the terms of the Maastricht Treaty that they signed--the one in which they solemnly promised to keep sovereign debt and deficits far below current levels? How many of the electorates in these democracies will support government “austerity plans”--a significant reduction in the government handouts to which they have grown so addicted?

The modern welfare state is broke. As Herman Van Rompuy, the president of the European Council, has stated, “We can't finance our social model anymore.” Government spending will have to be trimmed whether Europeans want it or not, but don’t expect European voters to admit the inescapable economic facts and vote for belt-tightening.

It is because voters don’t want to surrender government benefits that Papandreou’s announcement of a referendum in Greece has caused consternation and displeasure among the EU’s political elite. The irony here is rich: How dare the leader of a democracy leave such an important decision to the people!

Personally, I think Papandreou did what he had to do. If he were to try to cram austerity down the throat of his compatriots, he would appear to be siding with foreign elites against his own people. The present simmering rebellion in Greece would increase, giving way to social chaos and the fall of Papandreou’s government, thereby triggering the sovereign default that Europe’s leaders understandably want to avoid.

If Greeks vote against the terms of the bailout, Greece will default. If they approve the plan, then a Greek sovereign default may be delayed (not eliminated--Greece is too far gone to rescue). Even if we remove Greece from the equation entirely, events in Spain, Italy, Portugal or Belgium might trigger the dreaded chain reaction of bank and sovereign bankruptcies.

Decades of government intervention into economic activity have produced economic distortions, sluggish growth, an unsupportable debt burden, and a rotten financial structure ready to collapse of its own dead weight. In spite of that record, most Europeans want more government. That’s their choice. Like it or not, sooner or later, we reap what we sow.

Dr. Mark W. Hendrickson is an adjunct faculty member, economist, and fellow for economic and social policy with The Center for Vision & Values at Grove City College.
 
« Previous Blog Entry (October 31, 2011)
 


Your Opinions and Comments
 
Elaine K.  
Floresville  
November 2, 2011 2:23pm
 
 
New post.
 

Share your comment or opinion on this story!


You must be logged in to post comments:



Other Commentaries
Commentaries
Commentaries page govtrack.us
Commentaries who represents me?
Blue Moon Karaoke & DJVoncille Bielefeld homeChester WilsonSacred Heart SchoolWilson's Auto ChooserDrama KidsHeavenly Touch homeAllstate & McBride RealtyTriple R DC Experts

  Copyright © 2007-2014 Wilson County News. All rights reserved. Web development by Drewa Designs.