Posted 10/14/2011

SLOVAKIA: WHERE NO GOOD DEED GOES UNPUNISHED

Ambroz Zanobia is really angry at the Greeks.

He visualizes Greece as a fat man with his hand out for money.  He sees his Slovakia as a thin man being asked to give his hard-earned euros to the fat Greek.

Last Tuesday, Ambroz and a million people of like mind forced the Slovakian government to fall because it wanted to support expanding the European rescue fund to 440 billion euros.

A new government is being formed which will probably agree to the expanded fund.  But anger at the high-living Greeks is increasing.  The citizens of Germany, Finland and The Netherlands pretty much feel the same way.

The frugal countries of Europe feel they are being punished by the irresponsible, high-living countries of the south – Greece, Italy, Spain and Portugal.

Consider Ambroz's case.

Ambroz is a poor man in a poor country.  He makes only 1,000 euros a month, which is 41 percent less than the average Greek makes.  "Why should a poor guy be asked to bail out a middle-class guy?" he asks.

Ambroz's government has been frugal, spending less than six percent of its GDP on public pensions.  Greece, on the other hand, spends a lavish 12 percent of its GDP on pension programs.  Slovakia's debt-to-GDP ratio is a mere 41 percent.  Greece's debt-to-GDP ratio is an astronomical 142 percent.

Ambroz doesn't understand why the frugal Slovaks should be asked to bail out the big-spending Greeks.

He also knows that the Greeks tend to renege on their bailout agreements.  The last time they got some bailout money, they pulled back on honoring the budgetary agreements which were a condition of the loan.

Ambroz also knows that the new, bigger bailout fund will also be used to help Italy and Spain because the financial reputations of those countries are in the pits.  Nobody has wanted Spanish and Italian government bonds since early summer. The European Central Bank has been forced to buy the bonds in order to hold interest rates within reason.

Ambroz is also angry at Germany and France for sponsoring the bailout fund expansion.  While neither government wanted to bail out Greece, they were forced to do so because so many greedy French and German banks have huge loans outstanding in Greece, Italy and Spain.

If Greek defaults, the financial problems would quickly spread to Italy and Spain, and just as quickly bring down a whole flock of big European banks.

What really outrages Ambroz is that the so called "Greek Bailout" is really a big bank bailout.

A big bank bailout that is going to cost the Slovakian taxpayers a lot of money.

Just as it happened in the USA.

(click here for a printable version of this article)