Throwing Water on a GREECE Fire – An Explosive Action

It is common knowledge that if grease gets hot enough (above 600 degrees Fahrenheit,) it will catch fire.  It is also common knowledge that such a fire is best extinguished by taking measures to smother the flames, and NEVER to throw water on such a fire.  If such a mistake is made, the result is explosive and VERY destructive.  Thus, the resultant adage: “Never throw water on a grease fire.”

There is another saying that “if you spend money like water,” you are spending too much.  The European Union and the IMF would be wise to understand this concept.  This is especially true now, as Greece is literally on fire.  Rioters are throwing Molotov cocktails, burning buildings, and destroying historic treasures in a temper tantrum over the loss of entitlements as part of austerity measures proposed by the European Union.  In exchange for strict austerity actions on the part of the Greek government, the EU has agreed to bail out Greece.  The problem is that the fire is burning literally and figuratively out of control.  Greek citizens are not keen on austerity.  Yet, the EU plans to throw lots of water (money) on it. It is predicted that the fire will just burn hotter; So much so, that a literal meltdown is predicted.

In fact, it is almost a surety that the current Greek government, which is supportive of austerity measures, will be ousted in favor of a socialist, anti-austerity government. This will, almost certainly, lead to default on the debt and Greece’s exit from the Euro. The impact on the Euro and the fragile European economy will not be nominal.  Likely such a default will lead to runs on banks in Greece, as well as in Spain and Italy, with depositors attempting to move their money to Germany.  Massive borrowing from the European Central Bank will take place to keep the Italian and Spanish banks from collapse.  Germany will have to decide whether or not to shoulder the additional debt or allow the Euro to collapse.  The latter is a strong possibility.