A Greek Tradegy?

Tic....tock
Tic....tock

So the world awaits the decision of the Greek parliament today. I have no insight as to which way it is going to go as either way the Greeks are screwed so it must be pretty hard to make such a decision (a real do I lose a leg or an arm movement?)

Global markets are very nervous - But what is puzzling me is the attachment of so much to Greece. One remembers the battle of Thermopylae and its significance to the Persian Wars - but today really is not like that is it? yet today does feel like the day when the US Congress was discussing the TARP during in 2008. That in itself if bizarre, a wealthy private investor could probably bail Greece out on their own, it is simply not the scale of the US; which just goes to demonstrate how much markets are driven by psychology and not rationality

'Bad Country' needed, not 'Bad Bank'

Our great leader, Gordon Brown, has admitted yesterday to thinking about creating a 'Bad bank.' Along the lines of the original US TARP model, this would buy the worthless assets (can you spot the problem with this idea yet?) from UK Banks, which would relieve their balance sheets and so enable them to lend and end the credit crisis.

Genius, ain't it?

However, this is such a good idea that we should think much bigger instead. What the world needs is a bad country that 'buys' all the bad debt from across the globe and so sacrifices itself in order that the rest of the world can emerge quickly from its economic malaise. We should immediately ask the UN to vote on this, as we could do this and end the global recession in a few weeks.

I suggest some countries below, please add more in the comments; You only get 2 sentences to make your case.

Luxembourg - they can't invade us back and are a bunch of tax evading accountants and lawyers.

Israel - if this is a UN vote, then the outcome is a forgone conclusion; as they are brilliant business people and would soon be out of trouble in any event....

Zimbabwe - With hyperinflation at over 2 million percent, the debt would all be reduced to a manageable amount within in a few minutes...

Iceland - They got is into this mess....

Taiwan - St Helena, well it worked for Napoleon.

So who else, did I miss any obvious ones?

All hail the US Cavalry

Many good and sensible people in the US realise the US bailout is a terrible deal for US taxpayers. Nouriel Roubini, previously seen as a nut job and now recognised a very prescient, has a great post showing how there are many ways to tackle a systemic banking crisis.

What the US is doing is a very expensive way and one that saves shareholders over taxpayers ultimately. Our own problems with recognising what is and is not a systemic crisis (B&B, Northern Wreck) with our sporadic and random government interventions (see HBOS, see BOE massive money market operations).

However, for UK taxpayers, what a massive break! If only are stupid Government can keep itself quiet for a few minutes. The US will bail out RBS, Barclay's and HSBC - the last of our real worries (hedge funds and OE firms can go bust without too much effect on non-stock market participants).

With this maybe Robert Peston will be right and there will be no more banking failures in the UK. This is good news, as the recession we are entering and the housing market crash will be pain enough for the next few years as it is.

Sadly, my hunch is that Gordon Brown will want to 'do something' and UK taxpayers will get shafted like those in the US.