I thought we had a capitalist system. Isn't that what the financial class was propounding as they quoted Ayn Rand as justification for no regulation and allowing the "magic of the marketplace"? But now, those very same bankers, who played a major role in cratering the world economy through deliberately irresponsible loans and debt schemes, are instead demanding that governments bail them out completely, and at taxpayer expense too.
If we had actual capitalism, these banks would be given the opportunity to fail. Isn't that how capitalism is supposed to work, that banks that were so carelessly, if not criminally, managed that they are now insolvent need to and should fail? Ayn Rand, steely-eyed fanatic that she was, would be spinning in her grave at failed banks being propped up by any means necessary by governments. And while we're at it, Alan Greenspan, one of the chief architects of our current financial disaster, loudly proclaimed himself a Randian, even while as Chairman of the Fed he continually intervened in the markets to get a desired effect. I'm not sure if this makes him a hypocrite or just deluded.
Portugal and Spain are next to be bailed out after Ireland, with Italy and others after them. While the EU is making bold noises about being up to the task, it's clear they don't have the money or the wisdom. The problem is that they are forcing these countries to pay back bad debt and bonds at full value. This is preposterous. When an entity is failing, the normal procedure is to allow them to pay off the debt at pennies on the dollar. But that's not what has happened in the US or now in Europe. Instead, the banks and bondholders get a 100% bailout, financed by the taxpayers. Again, this is not capitalism, and if the banks continually get bailed out by overly agreeable governments, then they have no impetus to change their ways.
Euroskeptic Nigel Farage recently spoke to the European Parliament and blasted their overweening arrogance in demanding Ireland negotiate its debt before being allowed to have an election. He also said:
"The euro game is up… Just who the hell do you think you are? You are very dangerous people... If you rob people of their identity, if you rob them of their democracy, then all they are left with is nationalism and violence. I can only hope and pray that the euro project is destroyed by the markets before that really happens."
A year ago he was probably regarded as a crank howling in the wilderness - but not anymore, I'm guessing. There have already been major protests in Britain, Portugal, and Spain, and it's a given that more are coming.
"Ireland's problems should concern the U.S." says The Hill, saying the amount of debt owed by Ireland and the other PIIGS (Portugal, Ireland, Italy, Greece, Spain) is staggering, and that restructuring and bailouts could easily lead to the collapse of governments and the rise of more militant and populist regimes (Since I am a populist, I view this as a good thing, assuming they aren't hard right-wing nationalist populists because that leads to scary places indeed.) Also, a weak euro will hurt US exports. Most ominously, a major financial crisis in Europe threatens the stability of the entire system, just like the collapse of Lehman did in 2008.
There seems to be no way a major eurozone crisis can be avoided. This of course will impact the already weakened California economy as trade slows, currencies fluctuate, and companies batten down the hatches (if they can.)