My schedule is finally close to getting back to normal after Worldcon, so here’s the latest Friday LinkSwarm:
Posts Tagged ‘Greece’
It’s shaping up to be another busy week, so here’s a quick update on the European Debt Crisis front:
The ongoing European Debt Crisis hasn’t ended, it’s merely undergoing a summer hiatus while the various bankers and Eurocrats involved in the shell game take their customary 8 week vacations. As such, expect a new round of crisis headlines to come rolling in during the fall.
Remember: The purpose of the shell game is to let insiders unload their bad debts onto taxpayers. (Look how it was done in Ireland for pointers.) The shell game will continue as long as the insiders can get away with buying off restive electorates with an unsustainable cradle-to-grave welfare state.
Europe’s present is our future.
While attention was focused on the Boston bombing, Gosnell, and gay marriage, Greece just got another bailout. This is in exchange for further “austerity.”
So Greece wants more money because it can’t even keep to its previous promises on its fake austerity goals.
Let me explain it once again: Real austerity is cutting spending until it matches incoming receipts. Not reducing the rate of deficit spending. Not raising taxes so politicians can continue to spend.
No country in the EU (at least outside the Baltics) has practiced real austerity. That Forbes piece on the Baltic nations includes a lot of good advice that EU nations are largely ignoring:
Don’t run up big debts. It is a lot easier to manage when things go bad if you aren’t overextended to start. Observed Rosenberg: “Estonia’s experience shows that prudent policies during the boom may not avoid a bust, but they can put the country into a better position to deal with shocks.”
Don’t engage in an orgy of “stimulus” spending. That will run up big debts without generating long-term growth. When budgets eventually are cut, as they will have to be, the economic loss and political pain will be even greater.
Make tough decisions early. People typically are ready to act after the crisis hits. In the case of Latvia, argued Asmussen, by acting swiftly “most of the required painful budgetary decisions could be passed before the so-called ‘adjustment fatigue’ kicked in.”
Maintain fiscal responsibility. Otherwise any progress will be transitory. Growth is the natural result of reform. Delaying reform exacerbates the problem while prematurely terminating reform short-circuits the recovery.
Emphasize budget cuts. Expansive and irresponsible public outlays usually contribute to economic crisis. Moreover, the state as well as citizens should sacrifice after a crash. The answer is to cut expansive and irresponsible public outlays. In fact, economists Alberto Alesina and Silvia Ardagna found that “spending cuts are much more effective than tax increases in stabilizing the debt and avoiding economic downturns. In fact, we uncover several episodes in which spending cuts adopted to reduce deficits have been associated with economic expansions rather than recessions.”
Finally, don’t rest on one’s laurels. There always is more to do. Even nations which have implemented serious reform programs, like the Baltic States, could make further improvements.
As far as I can tell, none of the core EU states (and certainly none of the PIIGS) has tried this approach since the 2008 recession hit. They keep trying Neo-Keynesian pump-priming and deficit spending to keep both the Euro and their unsustainable welfare state float, and they keep experiencing endless recession. Their fake austerity comes in slightly reducing the amount of their deficit spending enough to pretend they’re in compliance to keep the bailouts coming. Ireland hasn’t practiced real austerity. Neither has Portugal, Spain, or Italy (though Italy has come closest).
The shell game of bailouts and fake austerity will continue as long as the Eurocrats can keep getting away with it.
This week we’ll do it Thursday rather than Friday:
The degrees of broke-ness varies: from completely and utterly broke, like Greece or Italy; to wobbly, like the U.K., France, the U.S., or Japan; to getting poorer like Germany. But all of them are going to have to raise the percentage of gross domestic product they collect in tax — and many of them very significantly.
The U.S. deficit is more than 7% of GDP. The U.K.’s deficit is just as high. There is very little sign that spending cuts to close gaps of that magnitude are on the cards, nor is there any sign that growth will be sufficiently strong to make up the difference — certainly not in countries like the U.K. or Japan.
Huge sums of additional revenue will have to be raised.
Willie Sutton once famously remarked that he robbed banks because “that’s where the money is.”
In the same way, governments will look to raise more tax from companies because that’s where the money is.
Or they could, you know, actually cut spending…
Judging from the Fiscal Cliff votes, the United States appears to be eager to follow in the footsteps of Greece and California, rushing to unsustainable spending, crushing debt loads and inevitable bankruptcy, rather than following the lead of Texas and the Red State model of debt-free limited government and free enterprise. So let’s see where the two states are, shall we?
Just in case you hadn’t seen it before, here’s Dave Barry’s 2012 year-end roundup, to spread some light and cheer in a very dismal year.
In Europe, the economic crisis continues to worsen as the government of Greece, desperate for revenue, is forced to lease the Parthenon to Hooters. Meanwhile Moody’s Investors Service officially downgrades the credit rating of Spain to “putrid” after an audit reveals that the national treasury consists entirely of Groupons.
Abroad, a closely watched attempt by North Korea to test a long-range rocket capable of carrying a nuclear warhead ends in an embarrassing failure when, moments before the scheduled launch, the rocket is eaten by North Korean citizens.
In finance, Moody’s downgrades Spain’s credit rating from “putrid” to “rancid” when the Spanish government, attempting to write a check, is unable to produce a valid photo ID. Meanwhile the Greek parliament, meeting in an emergency session on the worsening economic crisis, votes to give heroin a try.
Voters in the French presidential election, rejecting the austerity program of incumbent Nicolas Sarkozy, choose, as their new leader, Charlie Sheen. In other European economic crisis news, Greece, seeing a way out of its financial woes, invests all of its remaining money in the initial public offering of Facebook stock, which immediately drops faster than Snooki’s underpants.
New York Mayor Michael Bloomberg, having dealt with all of the city’s other concerns – disaster preparation, for example – turns his attention to the lone remaining problem facing New Yorkers: soft drinks. For far too long, these uncontrolled beverages have roamed the city in vicious large-container packs, forcing innocent people to drink them and become obese. Mayor Bloomberg’s plan would prohibit the sale of soft drinks in containers larger than 16 ounces, thereby making it impossible to consume larger quantities, unless of course somebody bought two containers, but the mayor is confident that nobody except him would ever be smart enough to think of that.
Tensions continue to rise in the Middle East when Iran unveils a new surface-to-surface ballistic missile named “Conqueror,” which, according to an Iranian spokesman, will be used for “agriculture.” Elsewhere in the troubled region, an unmanned Predator drone hacks Waziristan’s Twitter account and posts pictures of itself naked.
In the European economic crisis, an increasingly desperate Greece offers to have sex with Germany.
In labor news, Chicago teachers go on strike over controversial proposed contract changes that would allow the school board to terminate teachers who have passed away.
I don’t even need to tell you to read the whole thing, do I?
In order to divert attention away from the economic, moral, and political bankruptcy of Europe’s cradle-to-grave welfare state, some liberals, relying on figures from the Out of Our Ass Institute of Statistics, are tying to claim that Greece’s excessive spending comes from a “bloated defense budget.”
Try again. Greece only spends 5.5% of it’s budget on defense:
Either Europe (and the United States) must reform their runaway, bloated welfare states, or their welfare states will bankrupt their nations.