October 28, 2011
It has been clear for months in this European debt tragedy that those lending money expect those borrowing it to make some pretty tough choices.
I have had a couple of conversations with fairly influential people in Brussels whose opinions are along the lines of, “You have already spent the money and borrowed money to spend more. Now you need even more money and when we ask some questions and expect some answers and action, people riot in the streets!”
It is easy to argue that such opinions are quite right and as it should be. I am not going to put up a defence to the contrary. In this case, ‘the market’ is represented by a relatively small number of very visible people that are accountable to their electorates.
However, with this much needed deal in the last days, news seems to be dribbling out that China is being asked to foot part of the bill by purchasing bonds. It makes sense since they have lots of money.
Back in May, I asked what might the costs be to this ( Who Will Benefit The Most When Greece Exits The Eurozone? ). ‘Soft power’ being what it is, and since it is something that the EU is often quite proud of wielding, do we really want China to be in a position to wield it over us?
Now that there is a plan to put the funds in place to save the Euro and Europe, I hope that there is going to be a plan to pay back the money as quickly as possible. When all is said and done, the lack of planning to repay debt is what got us here…financialguy