Europe in Wonderland

If you don’t have the money, spend it anyway, says the Ukrainian government.
Of course, that’s no different than the philosophy of any other country, including the US.
In this case, however, Ukraine’s borders on default.
Please consider Ukraine Can’t Scrimp on Military Spending as S&P Rating Cut.
Ukraine’s president, speaking a day after the nation’s junk credit rating was cut further, said next year’s budget mustn’t cut corners on military spending and should account for the possibility of an invasion.
‘The war made us stronger, but has crushed the economy,’ Poroshenko said. ‘There’s one article of spending that we won’t save on and that’s security.
Ukraine is finalizing next year’s fiscal plan amid a new cease-fire in the conflict that’s ravaged its industrial heartland near Russia’s border. As its economy shrinks and reserves languish at a more than 10-year low, it’s also racing to secure more international aid to top up a $17 billion rescue. Standard & Poor’s said Dec. 19 that a default may become inevitable, downgrading Ukraine’s credit score one step to CCC-.

This post was published at Global Economic Analysis on December 21, 2014.