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Riddle of the Day

h/t @Zerohedge:

How many EU officials does it take to change a light bulb?

None. There’s nothing wrong with the bulb; its condition is improving every day.

The latest news from Europe: the new Greek package agreed last night will almost certainly fail — just like all the other bailouts agreed over the last two years.  A memo leaked to the (subscription required and eminently worthwhile) Financial Times says that even under the most favorable scenario, Greece will likely need yet another bailout.

But the light is brighter every day.

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  • BlogDog

    Maybe the EU should ask a home hints columnist about how to put out a Greece fire.

  • Stacy

    I love zerohedge. By industry insiders they’re considered a bunch of conspiracy minded wack-a-doodle-dos. And sometimes they are, but, then, they’re frequently right and not like in the broken clock way.

  • Frederick Davies

    How many EU officials does it take to change a light bulb?

    None; they banned light bulbs last year, don’t you remember!?


    PS: Sorry, I could not resist.

  • Kenny

    Greece will default by Summer

  • Dustin

    It’s only a matter of time before the USA starts having this exact same scenario.

    MA is probably going to be the first, as its treasurer is noting Romneycare is bankrupting the state (as a few conservatives warned it would when it was signed in 2007) but it could be California.

    Wither way, the bailout won’t fix the underlying problem and more than winning a $5000 lottery would fix a person with credit card debt. They will just spend it up.

    But what do you do? Let these states and countries fail? I think one solution would be to consider the state terminated, wipe clean the laws and government and constitution, and start over, perhaps with a constitution with several strict balanced budget measures (that go much farther than California’s BS one does).

    But that’s profoundly undemocratic. Perhaps the only democratic solution is to allow these failed states to have the disaster they walked into.

  • Tom Richards

    Greece will default by Summer

    That may well be, but for Europe, Winter is Coming.

  • koblog

    The Old Testament speaks of a “Jubilee Year” that occurs every 50 years. In that year, all debts are canceled and land that was sold during the previous 50 years from one family to another reverts to its original family. Sort of a giant “reset.”

    Apparently God knows that people get into debt trouble on the one hand, and, on the other hand, that wealth concentrates to those who know how to work the system.

    You can imagine that very few large loans or land deals were made in year 48 of that 50 year cycle, with both parties knowing that in just two years the deal would be null. This too limited the tendency of people to spiral out of control.

    The closest we have today is the concept of bankruptcy.

    But nothing has not stopped our Federal government from running up the largest debt in the history of the world.

    Something tells me, as Glenn Reynolds is wont to say, that something that cannot go on forever, won’t. I fear what it looks like when the music stops.

  • Eurydice

    The thing is that nobody knows if Greece will fail, not even the much admired Financial Times (subscription required), because nobody can agree on what failure means. If I were a bondholder taking a 53.5% haircut I’d be feeling like a failure already, without the help of eminent newspapers, and no matter what the troika claimed.

    And from what I can tell, success means a level of tolerance for a situation which will last for a very long time and which will be measured relatively against a lot of other moving targets. It wasn’t long ago that a debt-to-GDP ratio of 120% was considered a failure, except…oops, Italy’s at 120% and Italy’s way bigger than Greece and its collapse would be an incalculable disaster. And Portugal, despite its measures, is reaching 120%, but nobody wants to call attention because people would start asking pesky questions about Italy again. So now 120% is a goal, not a warning level. And for Greece, maybe 124-126% will be cause for joy.

    As for that leaked memo, leaked memos have been splashing around the press for weeks now as everybody wrangles for political position – one didn’t even need a subscription to read them.

  • Toni

    My answer would be “None. EU officials like their power and wish to change nothing.”

  • Eurydice

    @Toni #9 – or, “None. EU officials like sitting in the dark.”

  • David Aitken

    That light they see isn’t daylight; it’s a freight train coming through the tunnel.

  • richard40

    To Eurydice.

    My definition of success will be if Greece can actually cut enough to eventually start running a surplus, and actually pay off some debt, instead of just writing it off. I severely doubt that will happen.

    Somewhat more likely is that Greece manages to balance its operating budget, so their only deficit comes from debt interest. At that point, Greece could afford to default on their debt, and thus save on interest payments.

    Most likely is Greece does nothing constructive about their deficit, they go belly up, and pull out of the Euro, with the Germans getting stuck for their bailout money.

  • Lorenz Gude

    The best thing I’ve heard or read about this topic was on last weeks Disciplined Investor Podcast (#250) where Andrew Horowitz interviews Sidney based Satyajiy Das. Teaser. Das calls it ‘Extend and Pretend.’

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