Greece shuts down its bloated, money losing ERT public television/radio network. “Problems with Greek democracy are not the reason that ERT was shut down. ERT was an extravagant public company. Many, though not all, employees were hired under suspicious conditions, due to favoritism and nepotism, and receiveddisproportionately large wages (8000 Euros per month through the financial crisis and 13000 Euros per month before).”
Taki (who is Greek) offers some pungent assessments of his home country’s continual crisis.
In Europe, the law is seen is “an obstacle rather than a foundation.”
This is the endpoint of the cradle-to-grave welfare state. Certainly Detroit got there faster than most will, thanks to endemic corruption, horrific mismanagement, and an overwhelmingly unionized (and thus expensive and inflexible) manufacturing base workforce. But the problem of overspending, bloated government, overregulation, declining population and cronyism are endemic to blue states and members of the European Union. Greece’s future is Detroit (with possibly fewer race riots), California’s future is Greece, and deficit spending continues, eventually the United States’ future is that of California.
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.
Once again, Greece is being given money to pretend to reform. Look for more fake austerity, and another bailout in six months.
“Greece will never repay the money it’s been lent to ‘save’ it. The current debate over whether Greece has done enough by way of reform, tax hikes and spending cuts to have earned the next tranche of bailout funds is largely beside the point. If Greece is cut loose, or walks away, its euro-zone creditors will lose their money. The Greeks and the Germans are surely both aware of this. They’re also aware that Greece’s external debt position is far worse than when the bailouts began—when its debt stood at a mere 129% of GDP—and that any talk of debt sustainability in Greece has become a joke.” It’s now at 157% of GDP.
Predictably, Greek unions respond to more fake austerity and staff cuts by extending strikes.
Europeans realize that their governments are corrupt. Those who think they’re not corrupt? “In Spain that number is just 8 percent. In Italy, it’s 13 percent. And Greeks and Portuguese have the least trust in the world regarding their governments’ efforts: Just 1 percent of respondents say their government is making strides against corruption.”
And just how corrupt is Greece? “Politicians and journalists are viewed as on the take by most Greeks with 50 percent also saying they’ve had to bribe public officials to get services.”
The EU is preparing a banking union bill. No word on whether it will require depositors to take haircuts like those in Cyprus in the event of a bank failure.
Italy could be forced to beg for a bailout in six months.
UK actually proposes to roll back some 35 EU laws. This may be the first sign that Cameron’s wet Tories have actually noticed how effectively Nigel Farge’s UKIP is eating into their base…
California’s mullet budget: conservative in the front, but with a long greasy, tangled mane of liberal spending and debt in the back.
“Public pension costs are increasing simply because liabilities are growing faster than assets….To meet the rate at which pension liabilities were growing in 1999, Calpers needed the Dow to reach 30,000 by now.”
“California still has a mammoth long-term pension gap. If it used the same pension accounting standards as private companies must, its total debts would be a terrifying $1 trillion.”
What does the future look like in California? Well, take a look at Detroit, another one-party liberal Democrat fiefdom, where decades of chronic overspending and mismanagement are leading to a bankruptcy filing which will screw bond-holders and pensioners alike.
Speaking of bankrupt cities that can’t pay their bills, Stockton is paying out $5.1 million in settlements for retirees who are losing their health benefits due to the bankruptcy.
Some inside baseball news on maneuverings in the Stockton and San Bernardino bankruptcies.
Due the huge looming deficits, California’s public employee unions have had to accept wage cuts. Ha, just kidding! They’re getting raises.
Forbes makes the same point that I have made repeatedly: Austerity has not been tried and failed in Europe, it has been found difficult and left untried.
The official figures show that PIIGS governments embarked on massive spending sprees between 2000 and 2008. During this period, their combined general government expenditures rose from 775 billion Euros to 1.3 trillion – a 75 percent increase. Ireland had the largest percentage increase (130 percent), and Italy the smallest (40 percent). These spending binges gave public sector workers generous salaries and benefits, paid for bridges to nowhere, and financed a gold-plated transfer state. What the state gave has proven hard to take away as the riots in Southern Europe show.
Then in 2008, the financial crisis hit. No one wanted to lend to the insolvent PIIGS, and, according to the Keynesian narrative, the PIIGS were forced into extreme austerity by their miserly neighbors to the north. Instead of the stimulus they desperately needed, the PIIGS economies were wrecked by austerity.
Not so according to the official European statistics. Between the onset of the crisis in 2008 and 2011, PIIGS government spending increased by six percent from an already high plateau. Eurostat’s projections (which make the unlikely assumption that the PIIGS will honor the fiscal discipline promised their creditors) still show the PIIGS spending more in 2014 than at the end of their spending binge in 2008.
Remember: Real austerity is cutting budgets until receipts match outlays. In Europe this hasn’t been tried outside the Baltic states. Meanwhile, Japan has been trying Keynesian stimulus for two decades and has nothing to show for it but a mountain of debt.
Or take this abstract (I’m still working through the actual paper) from German Institute for Economic Research economist Georg Erber: “The core thesis of the paper is that taking a close look at the actual statistics available from Eurostat on the PIIGS-countries plus Cyprus, one finds little empirical evidence that the governments there have de facto reduced their total public expenditures.”
Keynesian pump-priming hasn’t worked in Europe. Could real austerity (i.e., cutting budgets until they’re balanced) work to restore growth in Europe (and here)?
For a shocking change of pace, the Friday LinkSwarm will be on Friday:
“How can we ‘gun people’ honestly be expected to come to the table with anti-gunners when anti-gunners are willfully stupid about guns, and openly hate, despise and ridicule those of us who own them?” Read the whole thing.
The lovely qualities of Jihadi Facebook pages: “The further I crawled down the extremist rabbit hole and the more caved-in skulls and headless corpses I saw.”
“The Euro cannot be destroyed by any craft that we here possess. It was made in the fires of Frankfurt. Only there can it be unmade.” What does it say when Sauron wants the ring, er, Euro destroyed as well? Though once again: Austerity hasn’t failed in Europe, it hasn’t been tried.
“It was one thing to do amnesty during the white hot Reagan economy of the mid to late 80s. It’s quite another to do it in the midst of the Obama depression.”
London mayor Boris Johnson thinks it would be a good thing for democracy if the UK were to just walk away from the EU.
Travis County Democratic District Attorney Rosemary Lehmberg is out of the clink after serving half a 45 day sentence for DWI. A jury will evidently determine “whether her drunken driving was habitual or whether the recent arrest was the result of a one-time event.” Because lots of people without alcohol problems suddenly decide “Hey, I’m going to go cruising around town with an open bottle of vodka and a blood alcohol level of .239! That sounds like a great idea!” I might believe that…if Lehmberg was 21.
“It’s time for public employee unions to wake up and take a look around. Government services are shrinking, cities are crumbling, and they’re enjoying pay and benefit packages that many in the private sector would kill for. They need to give a little back…Because up and down the state of California, and beyond, public officials foolishly negotiated contracts they can’t pay for without taking a cleaver to basic services, including police and fire protection, park maintenance, street repair.”
California’s total government debt, at all levels, is estimated between $848 billion and $1.126 trillion. Funny how the word “trillion” crops up in reference to debt when Democrats are in charge of things…
The New York Timesall but comes out and says that the LA Times is an extension of the Democratic Party. Which is why both the MSM and the Left are panicking that it might be sold to the Koch Brothers.
In a rare spot of good news for California, their revenue are running just far enough ahead of schedule that they no longer need to make do with internal borrowing between state agencies. But I would suggest that this windfall will prove to be temporary…
Texas once again named the best state for business by CEO Magazine. And California was once again named the worst.
Take a look at these charts. Unemployment in Spain is up over 25%, and most have been unemployed more than 2 years. Matthew O’Brien is correct when he says that Spain’s inflexible labor laws contribute greatly to the unemployment, but errs when he says that “austerity hasn’t been the path to prosperity. It’s been the path to perma-slump.”
Austerity hasn’t failed in Spain. It hasn’t been tried.
Remember, real austerity isn’t trying to tax-and-spend your way to prosperity. Real austerity is cutting budgets until outlays match receipts. Estonia bit the bullet and balanced its budget, and its economy is now growing at a steady clip. Meanwhile, governments all across Europe continue to try the same deficit spending Keynesian pump-priming, and keep having the same recession. In most of Europe, “austerity” has meant digging their own graves more slowly rather that stopping digging.
If all this sounds familiar, that’s because it is. Europe makes the same mistakes, gets the same results, and keeps doubling down on stupid, content to keep the farce running as long as they possibly can. Instead actually of solving the interrelated problems of debt, unsustainable entitlements, and the Euro, the Euroelite seem content to preside over the world’s slowest, most boring train wreck. Yes, it’s a pity the train is sliding inexorably toward the chasm, but there’s such fine vintages to be had in the saloon car, and it offers such a magnificent view of the coming crash…
Alarm bells have been ringing loudly in the heads of municipal bond investors…If you’re the chief of municipal bond investing for a big bank, whether on Wall Street or in San Francisco, Los Angeles or Chicago, this gets your attention. You might hesitate to lend hundreds of millions of dollars to other cities and counties if you fear they might go the Stockton route. Even if you proceed, you might insist on higher interest rates to compensate for what now appears to be added risk. That can translate to higher local taxes.
Current California pension reform proposals are only a start.
Sacramento proposes to spend $447 million on an arena for a losing, mismanaged basketball team. “It’s 60 to 75 percent public subsidies.”
Problem: California’s politicians spend money like drunken sailors with a stolen credit card. Solution: Eliminate Proposition 13 so they can spend even more.
Indeed, that was just one of the many pro-economic suicide measures passed at the California Democratic convention.
“The real problem With California is math, not politics.”
“The data for the two biggest states, California and Texas, appear to confirm a jobs slowdown in California over the past four months, likely due to a big tax increase passed by the voters in November. Meanwhile, Texas’ job market is accelerating.”
Stockton bankruptcy moves forward. Whether bondholders will be screwed over in preference to outrageous union pensions remains to be seen.
How blatant a money grab is this? “Meanwhile, the city was proposing to slash by 80% the $125 million in principal on pension obligation bonds that it had issued in 2007 to pay an overdue bill to Calpers.” So they intend to renege on a bond to pay CalPERS in order to keep paying CalPERS. That’s some scam they’ve got going on there…
A site devoted to looking at union pensions in Marin County.
California citizens: So, let’s talk about how AB109 has let violent felons out on the street early. How do you– California Legislature: Gun control gun control gun control!
