Posted by: Debby Durkee | February 28, 2010

Is Greece our future?

Debby's Web Finds
Is Greece our future?

Two recent articles showcase the warning signs that Greece’s problems should serve for our elected officials to get serious about the country’s gargantuan debt. One is from Mark Steyn who literally wrote the book on Europe’s declining birth rates and how that affects their crumbling socialist systems. The other is a stark warning from Fed Chairman Ben Bernanke that if the United States doesn’t get its fiscal house in order, we could go the way of Greece.

Steyn: When responsibility doesn’t pay.

This is a cautionary tale from Europe and the debt-ridden, socialist countries Obamacrats want to emulate. The European-created piper now wants to be paid by a non-existing younger generation, and what’s left? The irresponsible EU members (such as Greece) now want to live off of the responsible members (such as Germany.) Sound like any states in the U.S. that you might be familiar with? This is from Mark Steyn over at National Review Online.

While Barack Obama was making his latest pitch for a brand-new, even-more-unsustainable entitlement at the health-care “summit,” thousands of Greeks took to the streets to riot. An enterprising cable network might have shown the two scenes on a continuous split-screen — because they’re part of the same story. It’s just that Greece is a little further along in the plot: They’re at the point where the canoe is about to plunge over the falls. America is farther upstream and can still pull for shore, but has decided instead that what it needs to do is catch up with the Greek canoe…

What’s happening in the developed world today isn’t so very hard to understand: The 20th-century Bismarckian welfare state has run out of people to stick it to. In America, the feckless, insatiable boobs in Washington, Sacramento, Albany, and elsewhere are screwing over our kids and grandkids. In Europe, they’ve reached the next stage in social-democratic evolution: There are no kids or grandkids to screw over. The United States has a fertility rate of around 2.1 — or just over two kids per couple. Greece has a fertility rate of about 1.3: Ten grandparents have six kids have four grandkids — ie, the family tree is upside down. Demographers call 1.3 “lowest-low” fertility — the point from which no society has ever recovered. And, compared to Spain and Italy, Greece has the least worst fertility rate in Mediterranean Europe.

So you can’t borrow against the future because, in the most basic sense, you don’t have one. Greeks in the public sector retire at 58, which sounds great. But, when ten grandparents have four grandchildren, who pays for you to spend the last third of your adult life loafing around?

By the way, you don’t have to go to Greece to experience Greek-style retirement: The Athenian “public service” of California has been metaphorically face down in the ouzo for a generation. Still, America as a whole is not yet Greece. A couple of years ago, when I wrote my book America Alone, I put the then–Social Security debate in a bit of perspective: On 2005 figures, projected public-pensions liabilities were expected to rise by 2040 to about 6.8 percent of GDP. In Greece, the figure was 25 percent…Whereas America still has a choice, Greece isn’t going to have a 2040 — not without a massive shot of Reality Juice.

…President Ford liked to say: “A government big enough to give you everything you want is big enough to take away everything you have.” Which is true enough. But there’s an intermediate stage: A government big enough to give you everything you want isn’t big enough to get you to give any of it back. That’s the point Greece is at. Its socialist government has been forced into supporting a package of austerity measures. The Greek people’s response is: Nuts to that. Public-sector workers have succeeded in redefining time itself: Every year, they receive 14 monthly payments. You do the math…

We hard-hearted small-government guys are often damned as selfish types who care nothing for the general welfare. But, as the Greek protests make plain, nothing makes an individual more selfish than the socially equitable communitarianism of big government…Snip –

Think of Greece as California: Every year an irresponsible and corrupt bureaucracy awards itself higher pay and better benefits paid for by an ever-shrinking wealth-generating class. And think of Germany as one of the less profligate, still-just-about-functioning corners of America such as my own state of New Hampshire: Responsibility doesn’t pay. You’ll wind up bailing out anyway. The problem is there are never enough of “the rich” to fund the entitlement state, because in the end it disincentivizes everything from wealth creation to self-reliance to the basic survival instinct, as represented by the fertility rate. In Greece, they’ve run out Greeks, so they’ll stick it to the Germans, like French farmers do. In Germany, the Germans have only been able to afford to subsidize French farming because they stick their defense tab to the Americans. And in America, Obama, Pelosi, and Reid are saying we need to paddle faster to catch up with the Greeks and Germans. What could go wrong?

There is much, much more by the ever-brilliant Steyn. He goes into deeper detail about the others in the EU who won’t be able to pay up so that leaves Germany, which is already having its own problems. This is a really sticky wicket, one with no good alternatives. And yet, with all of this in the news, where are our betters in Washington? Are they looking abroad with trepidation? Do liberals ever learn from the mistakes of other liberals, or do they just think that somehow America is immune? Is liberalism a mental disease? Does that question answer itself? Read it all here: http://article.nationalreview.com/426405/when-responsibility-doesnt-pay/mark-steyn?page=1

Bernanke: US could become Greece.

As states like California and New York struggle to avoid bankruptcy and Greece’s economy topples and its people verge on anarchy, will our federal government finally face the warning signs? At least Federal Reserve Chairman Ben Bernanke warned Congress about the country’s rising debt, but will it actually make a difference? This is from Patrice Hill at http://washingtontimes.com.

With uncharacteristic bluntness, Federal Reserve Chairman Ben S. Bernanke warned Congress on Wednesday that the United States could soon face a debt crisis like the one in Greece, and declared that the central bank will not help legislators by printing money to pay for the ballooning federal debt.

Recent events in Europe, where Greece and other nations with large, unsustainable deficits like the United States are having increasing trouble selling their debt to investors, show that the U.S. is vulnerable to a sudden reversal of fortunes that would force taxpayers to pay higher interest rates on the debt, Mr. Bernanke said.

“It’s not something that is 10 years away. It affects the markets currently,” he told the House Financial Services Committee. “It is possible that bond markets will become worried about the sustainability [of yearly deficits over $1 trillion], and we may find ourselves facing higher interest rates even today.”

Mr. Bernanke for the first time addressed concerns that the impasse in Congress over tough spending cuts and tax increases needed to bring down deficits will eventually force the Fed to accommodate deficits by printing money and buying Treasury bonds — effectively financing the deficit on behalf of Congress and spurring inflation in the process.

Some economists at the International Monetary Fund and elsewhere have advocated this approach, suggesting running moderate inflation rates of 4 percent to 6 percent as a partial solution to the U.S. debt problem. But the move runs the risk of damaging the dollar’s reputation and spawning much higher inflation that would be debilitating to the U.S. economy and living standards.

Rep. Brad Sherman, California Democrat, asked Mr. Bernanke directly whether the Fed would consider such a strategy, especially since IMF officials endorsed it.

“We’re not going to monetize the debt,” Mr. Bernanke declared flatly, stressing that Congress needs to start making plans to bring down the deficit to avoid such a dangerous dilemma for the Fed.

“It is very, very important for Congress and administration to come to some kind of program, some kind of plan that will credibly show how the United States government is going to bring itself back to a sustainable position.”

So, on Wednesday Congress receives a stark warning from Bernanke to bring down the debt, and on Thursday we basically get the equivalent of the Toyota gas pedal stuck in warp speed from President Obama and the Congressional Democrats as far as health care is concerned. And, with our government basically guaranteeing Fannie and Freddie’s $5 trillion in debt, isn’t the federal budget even more bloated than it appears? Rep. Spencer Bachus of Alabama, the top Republican on the banking committee said, “(this is) the same sort of financial shell game that has brought governments like Greece to a crisis point.”  What planet are our “leaders” in Washington living on? And, at what point do their actions become impeachable offenses? Just asking. You can read all of this depressing story here.

http://washingtontimes.com/news/2010/feb/25/bernanke-delivers-warning-on-us-debt/

//

Bookmark and Share

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Categories

%d bloggers like this: