Perry Glasser

My Debt, Your Debt, Greek Debt

In Economics, Political Economy, Politics, Wall Street on July 17, 2015 at 6:40 pm

Wearily, Dollar$ emerges from semi-retirement with the vague idea of dispelling some of the more blatantly moronic opinions surrounding the current Greek debt crisis.

There are all manner of weasels infesting the world, not those cute critters, but the kind who live for re-election. As a refresher, Dollar$ asks readers to remind themselves on the sole priority that exists in democratic weaseldom–say anything, no matter how vague or false because relinquishing power is too horrible to think of.

Fat Eddie on the left.

Fat Eddie on the left.

This may be why it takes all of 48 hours for Alexis Tsipras, Greek’s Weasel-in-Chief, to reverse himself on what to do about Greek debt. You let citizens vote, you rouse the rabble, and then you renegotiate with the European Wizards on Wizard terms and screw your citizens.

GRIM TRUTHS
Economics is called the grim science for a reason.

One of the more grim truths of Economics is that when you get a loan, you gotta pay the money back.  Dollar$ learned this lesson from his old buddy, Fat Eddie, who spent many of his days on a park bench in the sun lending money at interest to longshoreman on the Brooklyn docks. Occasionally, for free, he’d share wisdom with callow youth.

I had a hot horse at Aqueduct. I wanted $100. The animal was going to go off at 20-1.

“I can pay you back tonight.”

“No kid. I like you. I appreciate your enthusiasm, and I even agree the horse looks good. But have you considered how you will get me my money and 5 points interest if the horse loses?”

“The horse is a lock.”

“What if he comes up lame? The jockey falls off? Or the horse has a heart attack?  Steps in a gopher hole? It’s a horse, for crissakes.”

“You can have my bicycle as security.”

“What am I gonna do with a freaking bicycle? Get outta here. Do something wholesome. Play blackjack in the park. Roll dice in an alley. Roll a drunk in an alley. Something wholesome. Are the poolrooms closed? Just get outta here.”

So as he slapped the back of my head, I learned my lesson from from Fat Eddie. No one wants to do business with a dead-beat.

It is bad for business.

DEBT
There are two kinds of debt, consumer and capital. Idiots crying for Greece and its screwed population do not know the difference, possibly because they are long-term debtors who have never experienced anything other than being a consumer.

  • Consumer Debt is money borrowed to purchase goods that will be consumed.  Nothing amazing there, right? You consume, bread, gasoline, shoes, and sealing wax. Once it is consumed, it is gone. If you do not have a source of income, you will eventually find paying back consumer debt impossible. Credit card companies will call you at odd hours. Your bills will be handed over to collectors. The road to a happy life requires that you NEVER assume consumer debt you cannot pay back by the end of a month. Credit cards issued by banks charge rates that make would Fat Eddie blush. The only exception is if you are temporarily embarrassed and the kid needs eyeglasses or new shoes. The key is the word temporarily. If your situation is not temporary, you really need either public assistance or a new job. We live in America. If you have to go bankrupt because you cannot pay back, the court will protect you from shylocks and collection agencies. You get a fresh start. No one is happy, and you will not be able to borrow dime #1 for several year, but you can get out of a jam. We no longer populate debtor’s prisons.
  • Capital Debt is money borrowed to make more money. You might hear it called “leverage.” If you are a going concern–a business or have a decent job–CAPITAL DEBT IS A GOOD THING! Why not pay 4 percent on the expectation you will make 8%? Sure, there is risk, but it is the kind of risk even Fat Eddie can respect. Your house mortgage is an asset  that will likely increase in value, Your car enables you to work beyond walking distance from where you live. Your education is a definite asset that will pay off many times what it costs to borrow–provided you do not borrow $150,000 to become a basket-weaver. A bank may be persuaded to loan you  the capital you need to start a business if the bank thinks the business can generate enough profit to sustain you, your employees, and still pay off the interest. If the bank thinks all this is true, the bank will throw money at you.

GREECE

Since 2001, Greece has borrowed money for capital investment, a step required for admission to the European Union and all the expected blessings of a single European currency.

Alas–Greek weasels confused Capital and Consumer debt. Instead of making its citizens more productive, a stratagem that would allow the debt to be paid off, duly elected weasels enforced a low retirement age. Since collecting taxes is nowhere popular, Greek weasel leadership looked the other way as tax evasion became a way of life for the people of Greece. The repeated bailouts were a vain hope by Europe that Greece would understand it was not a teenager with Daddy’s credit card, but a going concern responsible to its citizens and the international community.

Like Fat Eddie, the lenders want their money back. What is German going to do with a frigging bicycle? There are no assets waiting to be confiscated. This is a sovereign nation, for crissakes. No one is showing up to repo the Parthenon.

The knuckleheads who blame the banks for having seduced Greece into loans it cannot pay want to remember Fat Eddie. No one wants to lend money to a deadbeat. It’s bad for business.

What Greece needs is a weasel overhaul, not debt forgiveness.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: