Friday, June 10, 2011

Rescuing Governments Is All Very Well And Good

... but in doing so, the geese that lay the golden eggs are getting hurt.

Dig this.
June 10 (Bloomberg) -- Political wrangling over the future of Greece is infecting Europe’s corporate bond market, pushing relative yields to a 2 1/2-month high and forcing borrowers to pull deals.

The extra yield investors demand to hold non-financial company debt instead of government securities rose 3 basis points this month to 118, the highest since March 24, according to Bank of America Merrill Lynch index data. Denmark’s Nykredit Bank A/S and Finnish lender Pohjola Bank Plc postponed bond sales yesterday citing market conditions.

Euro-region governments are pitched against the European Central Bank in a dispute over what a potential restructuring of Greece’s sovereign debt would look like. German Finance Minister Wolfgang Schaeuble is calling for private creditors to take more pain while ECB President Jean-Claude Trichet warns such a course may spread contagion. A plan needs to be in place by June 24 to prevent the International Monetary Fund from withholding the next instalment of the nation’s bailout.
It's very nice to go worrying about whether or not a government can keep doling out benefits, but it's still the middle man. What's really happening is that people and corporations that create value are handing some of their profits out as government benefits. The governments don't create anything they just take from one person and give to another.

Wealth creators are suffering collateral damage from government overspending.

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