patrick.net

Why ECB is so desperate to keep Greece alive in Euro Zone? If Greece is a dead meat, just let it go. Anyhow, Greece GDP is just a small fraction compared to other members in Euro Zone.

During the Go Go year, I bet there must be tons of CDS and other similar financial instruments are being created out of Greece's debt and sold to the whole world. CDS is notorious of its ability to leverage the debt. If Greece debt being magnified 10 times, then $300b becomes $3T. $3T will really inflict some real punches to German, Italy, Spain and other healthier EU countries. What if couple of these bigger players, take Italy and Spain, go down, their CDS will be much larger than Greece's. I think this is why the EU and US is afraid of.

Someone is out there borrowed billions of US dollars at 1% interest rate and bought Greece government bond which is supposed to be "safe".

I did not say the national debt cannot go higher. I said it cannot go so high as to finance the debt required to start a "war on unemployment".
The USA gets money from 1. taxation 2. selling treasury bills and notes=increasing the debt.
There are no other sources of money for Uncle Sam.
The situation when FDR was around was different, he sold war bonds, etc. but the total debt service was not yet so high as ours is today.
For the last several years, the deficit was $1.5 trillion of so, so the fact is that Uncle Sam cannot afford to do anything else creative to do "make work" projects. There is too much debt spending already, soon interest payments will be so huge as to eat up all GDP growth.

If the Fed could create money, then why is Congress involved in raising the debt ceiling?
Congress spends the money, and the Treasury raises the money, either with taxation or selling debt.
The Fed may buy some of the Treasury debt, but it pays it back with interest of course. The Fed made $79 billion in 2010 which it also must pay to the Treasury.
The suffering is not going to end. The unemployment rate for high school graduates is very high, and since we have millions of illegal alien high school graduates competing for these jobs, the situation will not improve soon. This is a result of government not enforcing the laws.
They should have given small businesses a $1 trillion tax cut, instead of spending the $1 trillion in a wasteful stimulus which actually was just payment to state workers. They paid for some nice bathrooms along the 101 above Paso Robles and other absurd wastes of money.
Having "shot their load" and accomplished nothing with that $1 Trillion, they will not get their chance to see whether or not spending another Trillion dollars will help or not. It will not happen.
Who is right, is it worthwhile to keep spending and extra Trillion dollars to see if Krugman is right, or not? The consensus of opinion is it is not.

The War on poverty is a hell of a lot cheaper than a Civil War in more ways than one. TARP HAMP and the various other ways the Government has sucked TRILLIONS out of the Tax payer, to fight the War on shrinking Wealth. Makes the other social services look like postage in comparison.

Lets cut EVERY and ALL corporate subsidy in this country, then we can blame the indigent.

Krugman may or may not be right. The consensus is he is not. More to the point, the consensus of the the House of Representatives is Obama won't have a chance to try another $1,000 billion useless stimulus program soon.
I must repeat, the reason that we can't blow the kind of money as FDR did is that there were not so many expensive entitlements when he was president, and there was not such a gigantic pre-existing national debt.
So, blame the last people to take a stand against enormous debt for the problems, but spending borrowed money does not solve the fundamental problems, it just postpones the pain for a while.

Isn't it more a matter of when than if Greece defaults?

Where is APOCALYPSEFUCK when you need him to comment?

zzyzzx says

Isn’t it more a matter of when than if Greece defaults?
Where is APOCALYPSEFUCK when you need him to comment?

It looks like we are getting very close to finding out. It seems like every six months, Greece needs a rescue. The EU should just let the chips fall.

Underdark says

It looks like we are getting very close to finding out. It seems like every six months, Greece needs a rescue. The EU should just let the chips fall.

Though, IMO, defaulting on the debt is the right choice for Greece so they can start out with clean slate just like US personal bankruptcy law. However, cronies in Greece government will fight till their last breath to make sure the riches/banksters will not have to pay for the loss. They want the citizen to pay for the debt via tax increase or cut in social service. What's more, they will sell public properties to the creditors(other banksters) as means of collateral.

Everyone knows Greece can't really pay off their debt. This is the last act to make sure creditors will have their share of Greece carcass when Greece can no longer be milked.

Feel sorry for Greece citizens. And, what is playing out in Greece is the similar story will happen to US.

I would get some gratification if Grees did default and the result was the nobody would lend governments money any more.

Haven't wars started because of defaults in the past?

American in Japan says

Haven’t wars started because of defaults in the past?

I really don't see France, UK, and Germany invading Greece and occupying it until the debts were paid.

Personally, I'd prefer to see France, UK, and German banks refuse to lend other governments money in the future.