Taxpayers in Revolt
by Gary North
Think of Europe’s finances as a gigantic liquor supply system. There is a system of profit-seeking taverns (commercial banks). There is a clientele (sovereign states). Finally, there is a distiller (the European Central Bank).
The governments have been on a bender like none seen in modern times, especially those governments in sunny climates, plus Ireland, which has always known how to have a party. They all ran up their tab with their bartenders at pubs throughout the continent. It looked like the party would go on forever. It didn’t.
The morning after began in October 2008, but the hangover hit Europe in full force in the spring of 2010, when Greece announced that it could not pay its bar tab. It turns out that none of the PIIGS nations can. At best, they can make token payments.
This is true of all of the governments, but the ones in the north still have pretty good credit. The taverns can remain open to keep the clients coming in, but the party is clearly over. It’s down to regular patrons consuming a few beers and making token payments on their tabs.
The trouble is this: the governments, like all alcoholics, have built up a tolerance for booze. It takes more and more just to keep their heads from hurting. They are no longer looking for a high. They just want to get through the day. They are now morning drinkers. Afternoons, too.
How did it happen? It began with the European Central Bank in 2000. It controlled the flow of funds. It did not keep a tight hand on the spigot. The party got out of hand.
THE TASKS OF CENTRAL BANKERS