Friday, May 7, 2010
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Yesterday saw the biggest one-day point drop in stock market history, owing to a combination of factors. The first was the ongoing economic crisis in Greece, whose government has been spending imaginary money for so long that they've now been forced to tell people "you know those entitlements we promised we'd give you? We can't really afford them and never could."
The Greek people, in turn, are rioting in the streets and throwing molotov cocktails, outraged to find out that their government has been using Barack Obama's fiscal policy.
Meanwhile, Wall Street brokers realized that things could get ugly in our streets at the point the government finally admits that America can't pay for promised entitlements and never could. Which is why the brokers quickly started selling off stocks, someone accidentally typed "billion" instead of "million" while making a transaction, and 9% of Wall Street's value vanished in minutes. Fortunately, some of that value was recovered in the closing minutes of trading...making the day only terrible instead of disastrous.
But could the U.S. ever really see riots in the streets, or fire bombs thrown into banks? Apparently Barack Obama thought so one year ago when he (in)famously declared to bankers: "My administration is the only thing standing between you and the pitchforks." And the president continues to preach anti-capitalist rhetoric to make sure those pitchforks stay sharp.
All of this fiscal volatility boils down to one simple principle: governments that are playing "musical chairs" with unpayable debts will be thrown into chaos when the music inevitably stops.