When In Doubt, Bet On The Soma

Soma was a fictional drug that produced tranquil euphoria in Aldous Huxley's Brave New World. Virtually the entire population consumed it, mostly as a way of avoiding dealing with difficult problems.

Greece's debt problems are flaring up again. They've got big bills coming due in July and August and no way to pay them. The rest of the EU is demanding reforms as a condition for debt forgiveness or bailouts and the Greeks are fighting all but the most trivial of changes. Dig this.

Although public-sector numbers have been slashed, very few jobs were lost via redundancies: Most were shed via generous early retirement programs that now weigh on the pension system and are crippling the public finances. Meanwhile, Syriza (the dominant Greek political party who just won elections) has vowed to protect existing public-sector jobs, salaries and working conditions.

It sounds like chaos and devastation are about to hit Europe, but after watching this for a while, I'm coming to the conclusion that the abyss is still a ways off.

"Big" debts for Greece are not big debts for the EU. In July and August, the Greeks need to come up with less than $5B each month to stave off collapse. That's impossible for the Greeks, but practically nothing at all for the European Central Bank who could simply print the money so the Europeans could go back to their cafes and sip their lattes.

That's the way I'm betting. There will be lots of yelling and posturing, but in the end, the Europeans will take heavy doses of Soma, print some money and act like there was nothing to worry about after all.