Fighting Fire With Fire
Fighting Fire With Fire
To the Editor:
Maybe you can fight fire with fire.
I was taught that to extinguish a fire I am much better off using a fire extinguisher than a book of matches. According to Washington and now the European Union, I couldnât be more wrong.
On Sunday, European officials proved they are as irresponsible as US officials by bailing out Greece. I think that this was a huge mistake for Europe. They had a chance to stick to their guns and make Greece and their creditors pay the price for years of irresponsible lending and borrowing. Instead they took the political way out and are passing the problem to administrations to come. When is this going to change? It has to change! Itâs not complicated; itâs just a simple matter of risk!
I am a money manager, a certified financial planner, but most importantly a small business owner. When I started my business, I went to a bank for a loan, produced a business plan and proved I was a good risk. Why was I a good risk? â¦because of my ability to produce. If, for the sake of argument, I had no ability to produce, would borrowing more money be a viable option? Absolutely not! The bank would have withdrawn my line of credit and would have allowed me to fail. And I wouldnât blame the bank for denying me. Yet the European Union is now playing the role of an irresponsible bank. Greece is in terrible shape and the EU is fueling the fire rather than extinguishing it. Why is this bailout risky? Greece already has a ton of debt and no ability to produce (aka repay it).
The European Union had a chance to fight the fire with an extinguisher but opted for the book of matches. For the very short-term, the EU calmed the investorsâ fears and the equity markets recovered most of the losses from the prior week. In the long run the EUâs decision to delay the inevitable collapse of the euro will make the markets much more volatile in the second half of 2010 and send gold prices beyond current record highs.
Daniel M. Patti
84 South Main Street, Newtown                                    May 12, 2010