Eric S. Raymond blogs about
the sovereign debt crisis:
From overseas, we hear endlessly of the threat of sovereign default in Portugal, Italy, Ireland, Greece and Spain – the so-called PIIGS countries. The financially stronger EU countries (by which I mean, basically, Germany) have organized bailouts designed to give bond investors confidence that the PIIGS merely have a temporary cash-flow problem, but the markets aren’t buying it; the rush to unload Irish paper wasn’t even slowed down by the loan to Ireland. Analysts are now wondering if Belgium might be next.
What’s actually happening here is that bond investors are catching wise about the largest political truth of the post-Cold-War era: government is bankrupt.
That pretty much nails it. During the Great Depression, the West setup transfer systems that looked like they were moving money from "the haves" to "the have nots". Unfortunately, they did this on credit which means that in fact they were transferring money from tomorrow's children and grandchildren to yesterday's "have nots". As a result, tomorrow's children and grandchildren will have naught but debt.
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