The financial world was on pins and needles Wednesday as it awaited Europe’s latest, quasi-momentous decision on the fate of Greece. The Greeks themselves, no fools, were a step ahead of the politicians and bankers, rioting in the streets. Many of them have probably imbibed enough austerity to last a lifetime. Keep tightening one’s belt a notch at a time and eventually you’re left with two bloody torso halves. Not that the bankers would mind the mess as long as they get paid. So what, actually is at stake in this latest chapter of the eurobailoutpalooza? The rescue package under discussion amounts to a piddling €130 billion, and we can’t see how it’s going to make much of a difference. Even if it’s only intended to buy a little time, a sum as meager as that may not see the Eurocrisis through the weekend, much less through 2012. For perspective, Flint, Michigan’s unfunded retirement and health benefits total about three times as much. Is Flint in worse shape than Greece? Hard to say, although the close proximity of such charming resorts as Corfu and Rhodos, as opposed to beautiful downtown Detroit, would seem to tip the quality-of-life numbers in favor of the Greeks, even the down-and-out day-trippers.
As we went to press, Europe’s workout team, consisting of the ECB, the IMF and Greece’s leadership, was supposedly €300 shy of a deal. Their goal is a €3 billion package of spending cuts that would ostensibly keep this year’s budget on-track. Again, a comparison to Flint is instructive, since the bombed-out Michigan city’s annual budget shortfall is about $14 million.That might not sound like much in comparison to a long-term structural problem that tallies into the hundreds of billions of dollars, just as Greece’s adds up to trillions, but isn’t ignoring reality the point of these round-the-clock talks? As long as they continue to focus on 2012’s operating deficit, the long-term disaster that surely looms is out of sight, though perhaps not wholly out of mind.
And on Wall Street…
Meanwhile, U.S. stocks dithered on Wednesday whilst eurozone officials hashed out the final details. With any luck an agreement will be announced just before Thursday’s opening bell on Wall Street. Will it send stocks into a short-squeeze spasm that demolishes some major rally targets we alluded to here yesterday? It’s impossible to say, although we’ll be ready for Them no matter how They come at us. Perhaps Greece’s success in postponing a day of reckoning will inspire the denizens of Flint to focus on small details, lest the big ones overwhelm all hope of muddling along…forever.
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