Defaults and bailouts. The dominoes are falling.

Amplify’d from esr.ibiblio.org

Lost in the eye-glazing babble about maturity extensions, haircuts, and which acronymic organization is going to funnel the money into place is the real magnitude of the stakes here. It’s not just the Greeks’ opera-bouffé parody of the modern redistributionist state that is circling the structural-insolvency drain; what really terrifies our political class is the prospect that, very soon, the investors simply won’t buy government bonds anymore – and massive borrowing through bond issues is the only thing keeping the redistributionist state afloat.

Everywhere, the gap between political spending commitments and revenue has been covered by borrowing. The entire system of redistributionism, in which the political class buys the consent of the governed with ever-increasing handouts, has come to depend on the assumption that the bond markets will always be there to be tapped for cash to fund next week’s bread and circuses.

Read more at esr.ibiblio.org

 

Advertisements