Let me make sure I have this straight…

In Greece you have an entire country made up of people who spend an inordinate amount of their time not in productive pursuits but in schemes geared to help them avoid taxes or bribe their way out of them. That situation doesn’t exist, to nearly that extent, in any other European country. Their problem isn’t being too generous with public finances, it’s that they don’t want to pay for them. Without the IMF, Greece would be Somalia.

Yet now, Italy is a sovereign credit risk along the same lines as Greece? I don’t get it. The only explanation that I’ve heard that make any sense for what’s happening now with regard to the ‘debt crisis’ in Italy is…

1) The Italians have a large chunk of their debt coming due next year.
2) The Italians will obviously have to refinance the vast majority of that debt.
3) The debt is currently financed at low interest rates.
4) Currently the Italians do not have any problem making the interest payments.
5) The Italians would have a problem making interest payments IF the interest rates crept higher on that debt during the refinance.
6) Since Italy would have problems at higher interest rates and their debt would become unmanageable, interest rates are going up…unless they implement draconian budget cuts.

Can anyone explain to me how that’s not like a credit card company squeezing the hell out of a consumer? Or like an ordinary bank run? The logic is simple and elegant… even though they can afford to make the payments at the prevailing interest rates, they will have to accept higher interest rates because that would cause them problems.

And no one sees a problem with that kind of ridiculous thinking? No one sees a problem with clearly rampant speculation going on in Italian debt? Where the hell are the adults?

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