Name:   MAJ USA RET - Subject:   PIGS - The Road Indiscriminately Taken Date:   11/28/2010 10:28:50 AM

For years there have been warnings from the financial sector about the P I G S.  That would be Portugal, Ireland, Greece, and Spain.  The warnings became direr.  Though not in the order of the acronym, we have seen two fail in a year (Greece, followed by Ireland) and two about to fall with the domino of Portugal toppling Spain. 

In every case, the root cause has been not enough revenue to cover liberal entitlements. 

Greek public sector workers wanted a 38 hour work week, six weeks of annual vacation (not including sick leave), and to retire at age 58.  The government granted their wish. When the retired (entitled) overwhelmed the largess of the employed (taxpayers), the government borrowed to cover the debt. When the government could not even cover the interest on the debt, credit ratings (worthiness) collapsed. 

Greece went to the European Union (EU) and asked for a bailout.  The EU said, “…not unless you get a handle on your debt problem.”  The Greek government went to work on entitlements and retirement age.  The Greeks rioted rather than tightened their belts.  The pain of self disciple (austerity) was too much to assume.

In ancient Greece, how ironic, Aristotle noted, "That which is common to the greatest number has the least care bestowed upon it." 

Ireland has now followed Greece into collapse.  The same root cause, the same bailout request, and the same riotous response.

Portugal has professed that they don’t need a bailout.  Right!  That’s what Ireland first said.  The EU knows that the failure of Portugal will spill over into Spain.  You and I know that France will follow… and possibly Great Britain.

In each case, the more industrious countries have been forced to bail out the “feel-good, fiddle playing” countries (REM: “The Grasshopper and the Ants”, Aesop).  Germany, which will be the last standing EU economy, has already seen their creditworthiness contaminated by this whole self inflicted mess.  The Germans are considering abandoning the Euro!  They remember the 30s.  Germans don’t want to pay for the ill-conceived and irresponsible fiscal follies of the PIGS.  Does this sound much like secession?  Where have we experienced that in history?

Now that you have made it to the end of my diatribe, let us consider Illinois and California, followed by Michigan… and perhaps New Jersey. Who among you will adopt austerity in your own life to underwrite the ill-conceived and irresponsible fiscal behaviors in those states?  Haven’t we heard the word, though less than half-serious, “secession”, from Texas?