Bankruptcy Is a Beautiful Thing
In the modern economy, bankruptcy should be embraced, not diverted. As Greece and Spain plunge into insolvency, the world should know that bankruptcy is not an end, but merely a means to an end. Here’s my view on bankruptcy, and why it should be embraced.
Bankruptcy and Public Opinion
It is in the mind of voters, businessmen, and the worker that bankruptcy is a horrible thing. We saw during 2008 and the height of the financial crisis whole firms being bailed out in an attempt to avert oncoming bankruptcy. But bankruptcy is not ugly, no, it is one of the most fundamental elements of any free economy.
Had we let investment banks, neighborhood banks and other institutions go bankrupt the world would not have ended. Let’s be very clear, bankruptcy is nothing more than a margin call on a business. The business has to sell its assets, cover as much debt as possible, and make a clean escape. Assets are liquidated at huge discounts, and several new businesses can arise from the wake left by a giant. Imagine if GM/Ford/Chrysler were left to actually go bankrupt without a bailout. Their factories would be sold, and we’d have ten, twenty, maybe even thirty new auto companies rise in its place. Just like a fallen tree in the rainforest, bankruptcy creates opportunities for new businesses, new trees.
For whatever reason, most people think that after bankruptcy everything disappears. But even if WalMart went bankrupt, the real estate would still exist. The brand would still exist. The distribution channels would still exist. WalMart, as a business, would no longer exist, and neither would its debts. Its creditors, of course, would lose huge amounts of money, but that is why investments yield rewards. You are rewarded for risk-taking, and accept the risk because you view the reward to be greater than said risk.
Let Spain and Greece Go Bankrupt
Should Spain and Greece go bankrupt, their creditors will be fleeced, sure, but should they be bailed out, their creditors are going to hold equal losses. Bailing out any nation, entity, or business only prolongs the problem and leaves a much bigger problem for a later generation all the while continuing the problem of massive debt. Let Greece and Spain go bankrupt, let the government reorganize, and let the citizens map out a new future.
Greece and Spain won’t pay back. This was a calculated Risk, and a Lesson for the Banking System. What is happening in Greece, is a very well orchestrated show, to get granted €110bn aid, to avert meltdown.
The only thing Germans can do is:
REPOSSESS 170 Leopard 2AEX Battle Tanks from Greece, and 190 Leopard 2A6E Battle Tanks from Spain.
U.S.A must REPOSSESS 170 F-16 Jet Fighters from Greece, … the rest is gone with the wind …forever …
Greece must stop paying lucrative pensions with borrowed money, reform the free health care system, and cut down, 4 times the military budged.
Greece’s problem is too much debt. Greece has a budget deficit of 12.7% of GDP – meaning that the country is spending 12.7% more than the value of one year’s economic output.
Greece is no different to a serial credit card borrower who can’t pay back his loans. But just like a serial credit card borrower, as long as Greece keeps relying on borrowed money to fund itself, the problem won’t go away. It will just get worse.
http://www.defenseindustrydaily.com/Greece-in-Default-on-U-214-Submarine-Order-05801/
But don’t worry; the ECB, the Fed or both will print the money.
And all of us will share the pain, with our hard-earned money.
Bad is never good until worse happens.