John Mauldin has a great quote from Greek lawmakers regarding the debt crisis (from Reuters):
"Greek opposition lawmakers said on Thursday that Germans should pay reparations for their World War Two occupation of Greece before criticizing the country over its yawning fiscal deficits.
"How does Germany have the cheek to denounce us over our finances when it has still not paid compensation for Greece's war victims?" Margaritis Tzimas, of the main opposition New Democracy party, told parliament."
Another absurd piece of news from yesterday was a man crashing a plane into a government building in Austin, Texas because of what he considered unfair treatment from the IRS.
When did the world go crazy? The answer, it seems, is 2008. It's no secret that economic difficulty breeds social and political instability. The Great Depression was the main cause of the political and social upheaval that led to World War II. For proof of this effect, look to China, where it seems as if instability and economic growth are perfectly inversely related. Another case in point is The Economist's political instability index. Since 2007, this index has increased for every country in the World except Uzbekistan and the Seychelles.
Unemployment in the US is estimated to have peaked. The seasonally-adjusted unemployment rate has fallen (perversely) below 10%. Yet we have only begun to see the beginning of social instability. The global economy has begun to recover but policymakers have not yet made the tough decisions that will make the recovery sustainable. Eventually, these decisions are unavoidable.
So far, governments have kept spending at pre-recession levels. But these deficits cannot continue. Greece is significant because it is the first time capital markets have rejected funding a deficit. The bond vigilantes have arrived and are unlikely to leave.
