The Grecian Formula?

As I write this, the Central Bank of the European Union (the ECB) is putting together a $60 billion (in U.S. dollars) rescue package (a loan) to save Greece's bacon and keep it from completely collapsing into utter financial chaos. But, all this loan will do is delay the inevitable if Greece doesn't comes to grips with the bad financial housekeeping that got it into this problem.

Greece is like so many countries who are heavily burdened by too many expensive social programs and labor union related issues. Raising taxes just won't do it because taxes are already high and any new ones will just kill what's left of a fast declining economic environment. The problem of trying to cut back on social programs, excessive union labor rates, and spiraling expenses for fat retirement packages is that no one wants to give up their particular "program" or a "percentage of their wages" or "retirement pay and benefits". But, if Greece doesn't cut into all these costly programs, it will just burn through that $60 billion dollar loan like a brush fire in a drought-ravaged forest and, once again, find itself facing collapse. Greece, itself, has claimed that it really needs $160 billion to remain solvent over the next three years.

What is happening in Greece is bound spread to other Euro-Socialist countries. Licking the heals of their financial morass is Portugal, Spain, Ireland, and Iceland. Not far from that pack is Italy. So, if it spreads, you've got to wonder if the European banking system will be able to float another $100 billion more for Greece and, then, bailout Portugal. Or, another $100 billion for Spain; and, so on. I don't think so. If that should happen, and in a worst case scenario, the world could literally see a complete collapse of Europe's banking system.

If so, would the U.S. and other nations come to Europe's aid with the equivalent of an international TARP rescue program? Just maybe! And, that could actually put us at risk for collapse, also. That's because some of our own "states" are quickly closing in on their own financial crises. Right now, California is close. Like Greece, it has all the earmarks of a government gone wild with social programs, union wages, and generous pensions. Other states like New Jersey, New York, Arizona, and Illinois aren't that far behind. All together, our 50 states had a near-$50 billion combined shortfall for last year, alone; and, all see those numbers growing into this year and beyond.

These are very troubled times. Perhaps, just a calm before the ultimate storm.