Say Goodbye to the Euro - it's just a matter of time

HEADS, UP !!!

         Let's be frank, The EU ( European Union ) is the economic step-child of NATO ( North Atlantic Treaty Organization ), the U.S. concoction of nations aligned against the then U.S.S.R.. NATO is nothing short of political arbitrage, with the U.S. at the helm; the EU is an economic derivative without direct U.S. control, spawned from the 12 protocols of the Treaty of Rome, 1957. A neat idea at the time, 1957, and for a short time thereafter while then participant nations, lead by Germany, were experiencing unprecedented economic growth. The focus was on economic growth experienced by the core nations: Germany, France and Italy; Germany doing the heavy lifting. Things were humming along when U.S. Financial Institutions, the pied-pipers of greed, lead the world into a financial depression. The U.S. lead depression exposed the weakness and flaws of the Euro and left the 17 Euro subscriber states to flounder.

        Greece was the tip of the iceberg engendering chatter from the ECB ( European Central Bank ) resulting in leveraged support for European Banks holding sovereign debt, in short the bail-out of Greece. Portugal, Spain and Italy are on the short list, and next in line. Forget the economic pundits, media pundits and the like, simple population demographics reveals the fundamental flaw when 17 EU /Euro nations with disparate populations and productivity, subscribe to a single currency, the Euro.

         Aside from the gibberish of economists and bankers, it all boils down to population and demographics: how many working German's will be willing to support the life styles of 130 + million people in the non-productive nations of Greece, Portugal, Spain, Italy + 11 other Euro subscribers like Ireland. Perhaps it's to early to include Italy, but things are not well in Italy. So take Greece, Portugal and Spain with combined populations of around 70 million and compare it with the population of Germany 82 million, 26% under 18 and 21% who are over 65, leaving an estimated workforce of 44 million minus 5.7% unemployment or 41.5 million working German's to carry the load and support the lifestyles of 70 million Greek, Portuguese and Spanish, with 61 million Italians soon to follow. Okay, France, with an estimated workforce of 30 million but 10% unemployment, 27 mil net [ 72% of the French workforce is in Services, i.e., non-industrial ], may be of some help, but neither Germany or France can sustain the burden of 15 failing member state economies. Just how many people can one working man or woman [ mainly German ] carry on their shoulders: two (2), three (3), four (4); say goodbye to the Euro.

WORLD ON A PRECIPICE - THE GREEK ECONOMIC DEBACLE

Greece has become the "poster child" for a looming problem that faces every nation with debt. The root of Greece's problem, is the root problem for all nations: interest and it's relation to value. The concept of "interest" has long plagued the economic scholars, and debate on the issue continues to this day. "Interest", the price paid for capital, adds nothing to the true value of goods and services generated by society. Interest, as an economic function, is an enabler; it enables one access to and the use capital one does not have. The common form for "interest" is the "time payment" plan most consumers and citizens are familiar with. For reasons that are more academic then practical "interest", the cost of capital, has been added to, rather then deducted from "value" resulting in artificial values that exceed real value, and higher GDP rates. Such anomalous accounting has political import, but distorts a nations true ability to meet sovereign debt obligations. One begins to realize both the scope and magnitude of the problem when the Greek circumstance is considered. The problem is a world problem that all debtor nations face, the U.S. included. Financial markets are based on a contrived house of cards; credit extensions only aggravate fundamental structural problems. Immediate national financial problems, i.e., Greece, cannot be resolved without making fundamental structural changes to real world economic beliefs and policy.

All central banks including that of China, should enter into a binding compact
mandating and limiting "cost of funds" to a range between 4% to 6% ; this range would be fixed for ten (10) years; and, thereafter fixed, subject to range adjustment, for incremental periods of ten (10) years. Cost of funds would be deducted from adjusted GDP, with credit being limited to 25% of adjusted annual, calendar year based, GDP. Participating bank and institution accounting would be based on the calendar year. Extensions of credit would only be available to corporations and entities based on the calendar year, January 1 to December 31. The word economy must be in sync before national issues like Greece can be effectively addressed. The Greek problem is solvable but not by going in current directions. The world problem of mounting sovereign debt cannot be resolved by "theory" nor by extensions of existing credit by whatever semantic label that becomes the flavor of the day. The real challenge is for the nations of the world, is to abandon traditional alliances, ideological differences and thinking when it comes to economic order. The Greek situation is a test. If it fails, all will fail, and the world will enter a period of economic chaos and decline.