Posted on 07/07/2015 5:29:11 AM PDT by Kaslin
“The problem with socialism is that you eventually run out of other people's money.” – Margaret Thatcher
Greece is liberal economics on steroids, Detroit writ large, and a place where the "takers" outnumber the "makers." In other words, if you want to know what the end road is for the sort of economics pushed by people like Barack Obama, Hillary Clinton and Paul Krugman, Greece is it.
According to the World Bank, Greece’s labor participation rate is only 53%. It’s hard for private industry to take advantage of an underemployed populace because government regulations and powerful unions make it difficult for new job-creating businesses to get off the ground.
"Among those obstacles are the role the government plays in many sectors of the economy — either through outright ownership of assets, such as a utility; price controls; and high barriers to entry, such as strict limitations on the number of players in a profession, and/or difficult licensing requirements, according to the McKinsey report. Add to all that very tough labor restrictions on large enterprises. The result is that very few businesses have been able to get started or grow in size..."
Then there are pension problems, which are even worse than the ones we have in the United States.
"The Greek Reporter notes that according to the data, almost 75 percent of Greek pensioners retire before the age of 61" and "according to the IMF, pensions account for around 17 percent of the country’s GDP."
Greece has also been running a deficit four times bigger than EU members are allowed to have by law and papering it over with phony statistics. Incidentally, Barack Obama’s favorite Wall Street firm, Goldman Sachs, was involved in those shady dealings all the way up to its eyeballs.
Its government is so big that even Michalis Chrysochoidis, Greece’s minister of development and competitiveness admits it’s dragging down the economy.
Perhaps the most difficult hurdle for Greece to overcome, at least politically, is the size of the public sector versus the private sector.
“We cannot serve this huge public economy," said Chrysochoidis. "The small private sector cannot serve the huge public sector.”
In other words, America has many of the same economic problems that Greece does. Unfortunately for the Greeks, liberal policies have been adopted longer and more readily there than they have here, which has led to a more rapid deterioration of their economy.
The Greek solution to this has been to demand that people from other nations pay its bills. Unsurprisingly, the IMF, the rest of Europe and its creditors have grown increasingly disenchanted with Greece’s attitude.
Critics of Greece’s creditors have rightly pointed out that the draconian conditions being forced on the Greeks in return for keeping the money flowing are causing a lot of pain in Greece, infringing on their sovereignty and they are unlikely to work in the end. While that may be true, it’s also a natural long-term consequence of adopting liberal economic policies. Eventually, the government gets so big that it crowds out the private sector, which can no longer afford to pay for politicians and bureaucrats to be “generous” with its money. Then once spending gets so out of control that money can no longer even be borrowed under normal terms, the you-know-what hits the fan. At that point, there are no good options. Either you deal with demeaning, difficult cuts forced upon you by the people paying your bills, you default, or if you have your own currency, you inflate it until it’s practically worthless.
So, you may ask, why should we be happy that Greece voted “no” on the bailout package that was offered to it?
It’s because Greece is simply a decade or two (and that may be optimistic) ahead of America. Unless we make major changes, what’s happening to the Greeks now will happen to us in the future. In fact, it will actually be worse because no one is big enough to bail out the United States and a default by our country would likely lead to a global depression.
Unfortunately, that message hasn’t resonated with the American people because as a practical matter, they see no consequences to our spending. If you’re Joe Smith living in flyover country, you’ve been hearing people toss out all sorts of scary numbers for over a decade. You’ve heard all sorts of terrible stories about what will happen if America goes “bankrupt.” You’ve heard people from both parties say our spending is “unsustainable.”
However, as far as you can tell, the impact on your life has been zilch. Also, even though people talk a big game, what has been done about our spending? Nothing of consequence by anyone in either party. When push came to shove, even Paul Ryan who’s supposed to be this diehard fiscal conservative, helped undermine the Republican sequester cuts that had started taking a bite out of the deficit. Nothing that has happened in Greece would have made much of an impact either because enough money has been chipped in to keep the country from shaking apart.
However, that may be about to change because of the “No” vote in Greece. Hopefully, the rest of Europe will let Greece leave the Euro and make it on its own with no cash. That’s tough love, but not only does Greece need it, the rest of us need to see what happens when a country consistently spends more money than it has.
If it goes that far, what will happen in Greece? Some of this is speculation, but we can expect the government to steal part of the money from its citizens that has been deposited in the banks. The banks also seem likely to run out of cash. Money paid out by the government may simply stop or be replaced by IOUs. That includes salary, pensions and payments to the poor. The life savings of many Greeks may become almost worthless overnight. Richer and more able citizens may flee the country. Tax collection may become almost unmanageable even as taxes skyrocket. Everything from medicine to key industrial supplies may stop coming in because they won’t have any money or the ability to get any credit. Food and oil may have to be rationed. Thousands of businesses may shut down which would spike Greece’s already sky-high unemployment rate. Widespread rioting and disorder are also certainly possible.
Even if they deserve this because of their irresponsible behavior, you should pity the people of Greece. Whatever happens from here, they have a hard, ugly road ahead of them. However, the disaster of their own making that is befalling them may ultimately do some good. If Greece can’t be a good example, then the fiscal nightmare afflicting it can at least be a warning to Americans about what our future looks like unless we make some real changes.
Never mind Greece, what is the latest with that freak bruce jenner?
Oh yes. And homo marriage. Thank goodness so much time, effort, and attention has been devoted to making sure butt pirates can cram theirl lifestyle right up yours.
Isn’t Greece just a few months or weeks ahead of the same situation in other southern tier EU countries? Meanwhile the E U continues to try to force death by immigration policies on the U K..
Who cares
The GOPee also fights for Grecian govt economics.
Debates in the House of Representatives on the First Report on Public Credit 9–18 February 1790
James Jackson (Ga.)
But it is doubted with me whether a permanent funded debt is beneficial or not to any country.
The same effect must be produced that has taken place in other nations; it must either bring on a national bankruptcy or annihilate her existence as an independent empire. Hence I contend, sir, that a funding system, in this country, will be highly dangerous to the welfare of the republic; it may, for a moment, raise our credit and increase the circulation, by multiplying a new species of currency; but it must, in times afterward, settle upon our posterity a burthen which they can neither bear nor relieve themselves from. It will establish a precedent in America that may, and in all probability will, be pursued by the sovereign authority until it brings upon us that ruin which it has never failed to bring, or is inevitably bringing, upon all the nations of the earth who have had the temerity to make the experiment.
http://oll.libertyfund.org/titles/875
6. But the grand nostrum will be a public debt…
11. As soon as sufficient progress in the intended change shall have been made, and the public mind duly prepared according to the rules already laid down, it will be proper to venture on another and a bolder step toward a removal of the constitutional landmarks.
Rules for Radicals? No, Rules for Changing a Limited Republican Government into an Unlimited Hereditary One
http://www.constitution.org/cmt/freneau/republic2monarchy.htm
Socialism Is Legal Plunder
http://bastiat.org/en/the_law.html#SECTION_G022
OUTSTANDING article and comments this morning...
http://www.zerohedge.com/news/2015-07-06/who-biggest-winner-greek-tragedy#comments
I find it interesting that both liberals and conservatives think that Greek’s “No” vote is a good thing.
Liberals view it as taking a stand against the bully bank.
Conservatives believe it may be an educational moment on the results of socialism.
surroundedbyblue @3 wins the “Editorial Quote of the Day”!
They have sown the wind. Now let them reap the whirlwind.
I guess I’m the only one who sees this differently, because I really don’t think the Greeks don’t know that a serious financial debacle and readjustment is upon them, I just think that THEY, rather than the EU, want to be the ones to sort things out. I took all this to mean, “If we’re on a runaway train, we’d rather have Greeks in charge of the crash than the Germans.” Am I the only one thinking this?
The Greek referendum was a massive, self-administered single question IQ test that the nation flunked and then went out to celebrate its “futile and stupid gesture”. That it was well advertised, televised and commented upon provides a useful opportunity for those willing to learn from, and avoid repeating, others’ self destructive behavior.
We shall soon see how much was learned as there are other defaults in the works with the debtors hoping against hope that their creditors will capitulate to the demands of the mob. Perhaps the creditors, even those who casually lend other peoples’ money, will have learned something, too.
So many lessons to be learned from this.
Keynesian economic theory, combined with political expediency is the quickest way to destroy a country. Classical economic theory works only until it is combined with crony capitalism. Then that too will bring down a country.
When you have both theories going on at once, and then you add both political expedience and crony capitalism you get the United States.
In either case, reducing the size of government and instead of cutting up one pie you create more is the only solution to the problem, which neither the government nor the crony’s will ever do.
The only true solution is a Ted Cruz.
Maybe we can get that freak brucilla jenner to do a documentary featuring all of the empirical evidence of socialism and communism.
IMO the EU has run its course and will soon break apart. It’s problem is like the problem in the US, they have given the central government too much power. The nation states have essentially been castrated and are systematically having their identity stripped away. Can’t we say the same for our states as well?? Dissolve the EU!!
Greece has been taking European money for too long. Cut off all aid and make them do something useful for a change.
NO good guys in this equation....but certainly the Greeks are the worst of the bunch.
Interestingly, I’ve seen a number of reports indicating that Germany still suffers from a severe Nazi guilt hang-over, and is the only reason Merkel has allowed this to go on this long.
Force? The UK, under the great visionaries Tony Blair and Gordon Brown, freely and voluntarily adopted a policy of no-limit open borders when all the Eastern countries joined the EU - when other countries barred the new members from easy entry. The British have the topological advantage of being an island nation and could easily police their borders, but they just piss it away, all on their own. (I don't get it either.)
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