by Simon Black: Does
the US Government Want to Prevent You From Leaving?
I went to dinner
last night in an upmarket area of Thessaloniki. It wasn’t a
touristy part of town at all, nearly everyone there was local.
As we walked
down a narrow cobblestone path flanked by traditional Greek restaurants,
all the various hostesses and proprietors ran out to greet us and
pitch their menus.
the freshest seafood!”
the cheapest prices!”
free drinks and dessert!”
outright calamity ensued with each thrusting menus in our faces,
pulling at our shirtsleeves, and shouting over the competition.
Then a shoving match… and then finally an all out physical
altercation, literally coming to blows over what amounted to a $20
behavior is common in this part of the world; it gets even worse
in Turkey and North Africa. But there is an element of desperation
that I have not yet seen before here. Given the graveyard of former
restaurants gone bust nearby, it’s clear that last night’s
owners are trying to stay afloat at any cost.
Later in the
evening, I dropped by the city’s ancient agora ruins. Inside
I could see a number of stray dogs marking their territory as they
saw fit, and it was the perfect metaphor. This place has literally
gone to the dogs.
the Greek government held a ‘successful’ bond auction
yesterday, unloading 1.6 billion euros of six-month bills. This
sounds like a lot of money until you figure that it just barely
covers this month’s interest payments on the roughly 340 billion
euro debt that they already owe.
Just last month
alone, the Greek budget
deficit was 2.2 billion euros. Greece must continue indebting
itself not only to make interest payments, but simply to keep the
lights on. Meanwhile, the principal balance owed keeps rising while
tax revenues are falling… making the situation perpetually
fix this problem. Think about it like this: say your best friend
is swimming in debt, paying $5,000 per month in interest. His best
job prospect is $1,000 per month, so he’s in the hole $4,000
per month and rising.
If he receives
a new $10,000 line of credit, would this fix his problems? Not at
all. He’d be staring at bankruptcy again within 3 months.