Posted on 01/26/2015 7:44:07 AM PST by SeekAndFind
In Greece, the far-left Syriza party has won a stunning victory. Under the leadership of charismatic populist Alexis Tsipras, it has claimed around 150 parliamentary seats and defeated the governing centrist New Democracy party. Across Europe, leftists are elated. They see this as a historic turning point, the moment when they can put a stop to the austerity-through-spending-cuts approach.
And to some degree, they’re right. There’s no question that voters have rewarded a far-left party for its far-left platform. Just consider what Syriza proposes: significant increases in government spending, a rise in the minimum wage and in pensions, and a splurge on entitlements. Most important, Tsipras intends to renegotiate and write off most of Greece’s massive debt obligations.
Unfortunately for Greek voters, the world isn’t that simple. Syriza’s platform is, in fact, delusional. Alice in Wonderland comes to mind. “If I had a world of my own,” Alice says, “everything would be nonsense.” The Greek voters who brought Syriza to victory are asking for nothing less. After all, what are German taxpayers to make of Syriza’s proposals? Having already spent many billions to save Greece from a fiscal meltdown and preserve its euro-zone access, Germans are now being asked to give up on getting their money paid back. Syriza’s debt-forgiveness plan is fundamentally unserious. In fact, it’s an economic variation of the movie Dumb and Dumber — particularly the scene where Lloyd asks Harry to embrace him after trading their modified van for a pathetic scooter. In the same way, Tsipras seems to believe he can fly to Berlin and say to Merkel, “Listen, we’re also going to betray your investment, but we want you to smile about it.” In Dumb and Dumber, Harry accepts Lloyd’s proposal. But Merkel is not Harry. While Germany is likely to negotiate with Tsipras for the sake of EU stability, German voters aren’t going welcome more Greek irresponsibility.
This isn’t just about questions of finance and debt — it’s about the nature of society and the underlying role of personal responsibility. The undeniable, proven-by-history truth — a truth that the far Left in Europe and America ignores — is that socialism is a cause of economic suffering, not its solution. Greece’s economic difficulties (25 percent unemployment) aren’t caused by capitalism; rather, the blame lies squarely on the Greek governing class that for many years constructed an inefficient and ever more bloated state, with no one to pay for it. Instead of admitting this truth, Greek voters have taken two easier options: Blame Germany, and pretend things will get better.
But things will only get worse. As I wrote last year, when discussing France’s economic collapse, socialism’s failure is inherent to its ideology. When President Hollande tried to soak France’s high earners, they simply left the country or stopped investing. Hollande chose to completely ignore the movability of 21st-century capital, and his country is paying the price. Reality is hard, but as the U.K.’s successful “austerity” program attests — the U.K.’s 2014 third-quarter growth was 2.6 percent, compared with France’s 0.4 percent growth — spending cuts are necessary for investor confidence. These investors encourage private-sector growth and productivity.
Of course, politics is about emotion as much as reality. And here, socialism has one advantage in its favor: easy populism. Just watch this gem of a quote from the leader of Britain’s socialist Green Party, this weekend: “Maybe we’ll have to pay sewer cleaners more than bankers and that might be a good thing.” Matched to Syriza’s plans, that quote illuminates the ultimate truth. Looking in the mirror isn’t easy, and sometimes voters prefer to jump through the looking glass.
— Tom Rogan writes for the Daily Telegraph and is a contributor to The McLaughlin Group. He holds the Tony Blankley Chair at the Steamboat Institute, is based in Washington, D.C.
You could make a fortune selling magic lamps in Greece.
Greece has no hope of paying back its debts in the next five or ten years.
That’s even with further austerity.
Without economic growth to generate more revenue, the country can’t maintain its standard of living much less than to repay creditors.
Its clear the bailout package will be have to be reworked and Greece will need more time to pay its debts.
The alternative is bankruptcy and a Greek exit from the eurozone, which no one really wants.
All we can hope is cooler heads prevail in both Athens and Brussels.
I'm going to have to agree with that. Well put.
Sounds wonderful. But... Where's the money coming from?
Worked for our banks, didn’t it?
Same as what our banks did with TARP, etc.
Portugal, Ireland, Italy
The German bankers are buying up Europe with loans that can’t be paid back.
That statement makes no sense whatsoever.
There is a simple solution to that problem. Stop borrowing money. I don't think ruthless German bankers are putting a gun to anyone's head.
Truthfully, if they skip their debts, it will likely work. Argentina has defaulted eight times in 200 years, the last time in 2001.
Importantly, the last time it had to default, it didn’t want to, but had to because while it could pay most of its debtors, it couldn’t pay for a giant hedge fund that had speculated on Argentina. That somehow Argentina became responsible for.
In any event, this demonstrates what will happen if Greece defaults. It may take a decade for others to start loaning to them again, but they will.
It isn't the average citizens who are borrowing money. Its government leaders making the decisions who benefit from it. It's the same in the US. Government QE and bailouts and unsustainable debt has destroyed the middle class. Meanwhile, the elite have benefitted beyond imagination from it.
Political leaders are borrowing money primarily to buy votes via unsustainable social and business subsidy arrangements. They skim some to line their own pockets, to be sure, but it is the structure of state spending that is threatened. If simple graft were the problem, there would be no issue: stop borrowing, and let the crooked pols defer their payoffs. But it’s not so easy when pensions, public employee salaries, welfare benefits, student loans, etc. can’t be paid. The same thing will happen when the U.S. hits the wall.
Our banks welshed on their debts?
Same as what our banks did with TARP, etc.
Our banks paid back TARP. The Treasury made tens of billions in profit.
It means the banks are loaning money to people who can’t pay it back, and eventually the bank will own the collateral.
It was said in shorthand up thread.
economic fundamental......... you can’t get money from a stone
corollary........ you can’t collect a judgement from a dead man
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