[Mr Johnson] likens the crisis to Argentina's slide before default in 2001, a fiasco that led to calls for the abolition of the IMF itself. The Fund concluded in a post-mortem that it should never again throw good money after bad to prop up an unworkable structure with an overvalued exchange rate.Actually, the comparison seems a little unfair on Argentina.
EU officials react with outrage to comparisons with Argentina, but as Mr Johnson says "Greece is far more indebted, is much less competitive in global markets, and needs a greater fiscal and wage adjustment".
Argentina's public debt was 62pc of GDP in 2001: Greece will top 120pc this year. Its budget deficit was 6.4pc: Greece's was 16pc last year on a cash basis. Its current account deficit was 1.7pc: Greece's was 11.2pc in 2009.
Greece is just "the tip of the iceberg", in the words of China's central bank. The design faults of EMU have left all Club Med trapped in debt deflation or perma-slump. Europe's banks are in turn stuck with fatal exposure. You cannot safely uncork Greece without risking a chain reaction.Oh. Dear.
This has echoes of Credit Anstalt, the Austrian bank that collapsed in June 1931, exposing the underlying rot of Europe's banks. It set off an earthquake across Germany and Central Europe. Contagion spread back into the Anglosphere, snuffing out the recovery of early 1931.
The global financial order came crashing down. The Great Depression began in earnest.
Yet let us be honest. This is not a bail-out for Greece. It is a bail-out for European creditors that account for most of Greece's €391bn external debt (163pc of GDP). As such it is the first line of defence against greater sums at risk across Club Med. The EU rescue shifts the debacle onto taxpayers in order to prevent a systemic crisis, just like the bank bail-outs after the Lehman failure.Absolutely - let's face it, a bailout always falls on the taxpayer. Why is that? Well, basically because the government doesn't earn anything. It takes, extorts, and taxes whilst creating nothing. In fact, they create less than nothing, a minus figure, because their business is war, ie destruction.
NB: the insufficient bail-out and subsequent rallying of Greek bonds will give the banking oligarchs another opportunity to go short from decent levels. They really do seem to be intent on creating a financial cataclysm of a kind never seen before.