Announcing cuts in the deficit of €5bn and the world is supposed to tremble at the tough austerity measures that the Greeks have put in place? Yet ironically on the same day their statistical department is on strike (although who would be able to tell the difference), that their taxi drivers went on strike when they were told to keep receipts, or that their pensioners feel hard done by having the retirement age shifted to 63 from 61, Spartan indeed.
It appears now that Merkel and Sarkozy will backdoor the bailout for Greece by using state owned banks and institutions to buy Greek debt, and provide enough rhetoric to make the market believe they are standing behind the Greeks, without making their tax payers too aware of how much it could potentially cost them.
This raises the point that the Raven wished to make about speculation. That Sarkozy is encouraging speculation, by telling the world that they will support Greece, that they will pick up the tab, he is saying to the market, take that 6% yield, make that bet, because if there is a default we’ll bail you out. Heads, somehow Greece muddles through, you get paid back with 6% interest, or tails, the French tax payer will pay you back your stake. Worth a punt if that’s your bag.
It is a very common misconception that value is destroyed when a bubble bursts. The Raven would contend that value is destroyed when a bubble is being inflated, that money is wasted on unproductive investment, that when tulip bulbs sell at the same price as houses that value is being destroyed, rather than when the tulip price returns back to the earth. Its this stomach turning hypocrisy which Sarkozy is full of when he denounces speculators and yet from the
other side of his mouth encourages reckless bets on terrible speculative fundamentals."
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