Sovereign Default

Greece may not actually default, depending on the rescue measures that come its way. But Greece is already bankrupt. The creditors to Greece should understand that history is not on their side. In fact, the creditors to every sovereign borrower should understand that history is not on their side.

“While a European sovereign default has appeared inconceivable in recent history,” a recent Wall Street Journal article observes, “defaults and debt re-schedulings were actually a common feature of the European financial landscape throughout the nineteenth century and up until the end of World War II, according to the economists Carmen Reinhart and Kenneth Rogoff.

“Greece has defaulted or rescheduled its debt five times since gaining independence in 1829...”

Governments default. That’s what they do. They tax; they squander the tax revenues; they default. This is the established unnatural order of the governmental world. The Greek crisis may be the first sovereign debt debacle of recent times, but it won’t be the last.

Eric Fry on No Cure for Sovereign Default

Everybody Hates Capitalism

Few people really like capitalism — even people who call themselves capitalists. The feds could probably round them all up and gun them down in an afternoon. Capitalism is too chancy…too unpredictable…and too uncontrollable. No wonder so few people are fond of it; capitalism is a poor friend. It is disloyal. It is mischievous and willful. It is hard to get along with.

Capitalism offers is no sure route to success. You can be smart, work hard, and go to the best schools. There is still no guarantee that you will succeed.

Nor, once you’ve succeeded, is there any sure way to maintain your wealth, power and status. Wealth has no fidelity, neither to any one person, group, or family. It goes where it wants. It is fickle and unreliable.

Bill Bonner in Everybody Hates Capitalism