Beware of Greeks...

That warning was issued after the Greeks left a present at Troy. Now, some folks in Europe are afraid that the Greeks may leave another booby-trapped gift, worse than the Trojan horse.

In truth, the Europeans have no one but themselves to blame. The welfare states of Europe are bankrupt. They will never repay the money they borrowed; the Greeks were just quicker to unravel. Not  that Barak Hussein and his coterie are not trying to put us on the same path. Does anyone seriously think that this country will ever pay back the $18T we borrowed?

The  financial world is worried that a Greek default will upset the apple cart of postponing the Day of Reckoning. Will Greece have to leave the Eurozone? Probably YES. Will this break up the EU? Not necessarily. EU countries could still go on pretending that they are solvent and write off the E350B that Greece will default. This will be literally printed over with more confetti currency.

There is an even worse problem that flows out of the Zero Interest Rate or ZIRP. The problem is this: when a business makes a decision on production or expansion, they factor in the cost of capital. If the return on investment is too low that project will not be started. Along comes ZIRP and a lot of projects get started that would not be started in the absence of ZIRP. That means that many industrial activity that is not economical is being carried out. Add to this the loss of income from not getting interest on capital and we see the roots of deflation. Add to this the entitlements and government benefits and you have killed off growth. That is what is plaguing Europe and increasingly the United States.