The debt crisis in Greece won't leave the minds of investors, as the prospect of having to be bailed out by other European nations and the IMF is becoming more of a possible reality, and it didn't help to find out the country is in even worse shape than originally thought.
The budget deficit of Greece has been discovered to be even larger than expected, as the statistics agency of Europe discovered.
After news came out about the condition of Greece, borrowing costs for the nation rose again, which will in turn push them closer to a bailout.
Moody's has downgraded the debt of Greece again, and said there's a surety more downgrades will be coming.
I've been saying for some time there's no doubt Greece will have to be bailed out, but it creates enormous problems for Europe overall, and by extension, the rest of the world.
For example, what happens when Greece is bailed out and all the other troubled nations look at the opportunity as they struggle with their irresponsible financial behavior? Portugal may be the next nation to line up for a handout, and every other nation which knows it can get away with it will come asking for the same.
Taking into account how strongly Germany opposed the initial bailout of Greece, it seems not only improbable, but impossible that another bailout could happen, and there's already talk the original amount for Greece may not be enough as it is.
In the bigger picture, this is the greatest challenge the euro has faced since its inception, and the European Union itself could end up dissolving if things get worse.
This of course wouldn't happen in a short time, but it could happen over a decade or two, as there is no way they can deal with what is coming upon them, and if Greece is much worse than expected, how bad are the other nations in the European Union?
Why is all this happening? Socialism! People just can't keep distributing money to those who are unproductive and expect the productive to support them. You eventually run out of money, and Greece is finding this out, along with the rest of the world.
Even after all this many of the Greek people who have been recipients of the distribution of other people's money are protesting so they don't have any of what they think is owed them taken away.
Until governments and central banks change their worldview, this is going to happen over and over again, and ultimately like a bunch of dominoes it's all going to collapse under the weight of an unsustainable economic theory called Keynesianism.
Europe knows they're facing this, but there's little they can do about it unless they acknowledge the problem and just end the Union. They aren't going to do that any time soon, and so now will have to face the consequences, which will end up being brutal, and from which there's little to show there is any way out of.
The views expressed are the subjective opinion of the article's author and not of FinancialAdvisory.com
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