Twitch, twitch…

More twitches on my financial seismograph.  This time on the fringes of Europe.

Enormous pressure will be brought to bear on Latvia, Iceland and Greece to get their budgets under control and pay their debts. 

If one country is allowed to run, then chaos will ensue, with lots of other indebted governments asking the question, “If there’s no shame in defaulting, why don’t we do it too?”

That’s what’s happened in the US, with housing debt.  It’s no longer a source of shame to walk away from an underwater house.  So the whole housing crisis has become the creditor’s problem, not the debtor’s. 

Shame is really the only thing holding back the tide at the government level.  And once people work through the shame of default, anything can happen.

Which is why creditors cultivate shame in their debtors. 

Perhaps the Greeks have no shame?

We’ll see.

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