Kicking the can down the road – boy, are we good at it! Greece is off the front page – the government passed an austerity package in the form of higher taxes and less benefits that will cut the deficit from nearly 10% of GDP to a mere 7.8%. The stock market had one of its best rallies in history – we need only wait one month or so for Greece to face the hurdle of getting the next tranche of the 110 billion euro bailout provided by their friends in France and Germany. But a month is infinity away – besides, if we can kick the can down the road once, twice, thrice, we can continue kicking the can down the road forever.
Pictures from Greece can be viewed without much in the way of commentary.
Please note that the above figures are subject to manipulation and sleight of hand. The Greek government partakes in swaps and other derivatives to hide the true extent of their debt aided and abetted by Wall Street. The government deficit for 2009 cited above has been belatedly revised from 13.8% to 15% of GDP.
The Greek economy is only 20% industry, 3% agriculture and the rest service such as tourism, banking, telecommunications plus tax collectors who do not collect taxes and parasitic government workers who retire at 53 years of age with 80% pay and all benefits. The highest calling for Greek college students is a soft cushy government job – the epitome of the Nanny State. Germans, who actually work and produce goods and pay taxes, retire at 65 years of age and that may be increased. We can fully understand why the Germans are more than happy to roll over the debt for the Greeks – why, who wants to disrupt the Greek’s lifestyle? The French banks offered to revise their Greek debt from short-term to 30 year paper – an admission that the loans will never be repaid. Never maturing avoids the messiness of declaring debt dead, null, and void, which it really is.
Interestingly, the riots in Greece do not include the government workers. The rioters, workers without jobs, chased government workers away unconsciously admitting that government workers are the cause, not the solution, of the problem of their benefits being cut and taxes being raised. Of course every unemployed worker would gladly accept a government job if offered. Greece is the Nanny State at its last gasps for breath.
So why is Greece relevant? Why do we care? What Greece, and the other appropriately named PIIGS face, is the very same situation being faced by every state in this union including New Jersey. The 50 Nanny States making up the Nanny States of America are either burdened with Federal imposed requirements to provide benefits and to varying degrees have imposed upon themselves another layer of taxpayer burden. Thus with the states’ credit resources tapped out and drained long before the economic downturn, their expenditures skyrocketing as millions of citizens make the transition from taxpaying to drawing down unemployment benefits, and with no hope of a pending economic turnaround, the story of Greece is commonplace in every state, city and municipal government throughout the land.
The Federal government is temporarily immune to this liquidation process because of its right to print funny-money. But this too is drawing to a close as nations of the world seek a substitute currency to abandon the dollar as an international currency. One benefit of Greece is that it forewarns the dollar dumpers that the euro is not a replacement currency. This gives up reprieve to print dollars by the trillions until the whole house of cards, nay paper, come tumbling down.