Greece is voting this morning on austerity. The Greek people are in trouble - they let their nation grow on false hopes and false credit. And now the people are angry. They don't want austerity. And in many respects, although I disrespect how the country got to this point, I agree with the street. Where is Greece headed? Toward default. Toward leaving the euro. This is the only solution for them. They need a weaker currency. Why support a guaranteed recession/depression and further contraction when they should be focused on growing their industries through lower wages and export growth? A reduced standard of living is guaranteed either way.
But we all know where this is headed. Why should the Greek people protect European banks, who made bad loans to them? They should save themselves. Banks will have to deal with their own bad decisions. Bond holders will have to have their hairs cut. There have to be consequences for making bad loans.
I am starting to think, though, that the Greek government is wrangling cuts from the people, knowing it will default soon anyways, so that it will already have these cuts in place when it leaves the euro. And maybe in the end that is an acceptable strategy for it to have.
I am also thankful that this display is playing out right now as the U.S. struggles with its own debt showdown.
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