I haven’t posted on the debt problems in Europe in a while, but the continent is still in a slow-motion train wreck. Yields on one-year Greek bonds are over 100% now, a clear signal that the country is going to default.
If you’d like to see a snapshot of the cronyism and political patronage that has led to these seemingly insuperable debt problems, take a look at this article in the New York Times profiling an Italian hill town of fewer than 1,000 residents that employs nine traffic officers.
One of the officers is quoted in the article as claiming that the traffic jobs help keep the city alive because, you see, they patronize the local coffee shop with their wages and thus prop up the local economy. Keynes would be so proud.
The article goes on to state that 80% of the workers in Italy’s bloated public sector have lifetime tenure, and that there are no plans to cut salaries or positions, despite the beginning of an investor flight from Italian bonds. I guess the plan of most Italians is simply to manage to die somehow before the inevitable reckoning.