Wednesday, April 28, 2010

You Can't Help Someone Who Doesn't Want Help

... well, it certainly seems that way. The yield on Greek 2-year bonds went from 3% to 26% yesterday. 26% is what you would pay on your credit cards if you missed a payment. It's a clear sign that rational lenders don't think you can pay them back and they're trying to get the most they can out of you before you go bankrupt. The Greek problem is still not being clearly stated, however.
The force of the market reaction to the downgrades suggests that the EU's fraught, months-long effort to stem Greece's debt crisis has all but failed ... Like past debt crises, this one has fed on itself. Europe's failure to act decisively has led investors to sell off Greek debt, making it far more expensive for the country to borrow money, and prompting further downgrades.
By analogy, then, if you miss a credit card payment, it's because your neighbors didn't pay it for you. It's not because you spent too much money on things you didn't need, it's the fault of everyone else. While you lay passed out on your lawn, dressed in boxers and a tank top with empty bottles of Mythos beer all around you, they need to pick up the mail from your mailbox, sort through the bills and pay them.

That'll work, right?


jlbussey said...

Man, if I lay stretched out on my lawn in boxers, I don't think that going through my mail would be people's first inclination. Something more along the lines of calling a marine biologist about a beached whale...

(I don't have bills that come in the mail any more anyway, they're all electronic. And promptly paid, not that that gets you any respect these days.)

B-Daddy said...

Thanks for keeping me updated on this and great logic as well. Exit question is California like Greece, lacking the political will to take action to curb its deficit?