A view of the problems in Greece

[Bluegrasscard]

For those that can not see or do not want more of Mr. Farage here is the closing to the new video above:

 

"But it is even more serious than economics. Because if you rob people of their identity. If you rob them of their democracy, then all they are left with is nationalism and violence. I can only hope and pray that the Euro project is destroyed by the markets before that really happens."

 

This was a statement from November 2010. It is now playing itself out in Greece in 2012. Mr. Farage is apparently a good Cassandra.

[Bluegrasscard]

Absolutely we can agree that overspending can lead to problems. I just think people make too big and quick of a jump to equate our current or future situation with what has happened in Greece.

 

Yes. Different paths. I am not sure how Greece ended up where it did and it was headed there before the Euro came about. But now they can not fix it with home grown approaches and seem to be at the whim of the overseers who are trying to keep the Euro together.

[SportsGuy41017]

As I mentioned several months ago, the US debt is equals to around 35-40% of our GDP, which sounds a bit high, until you compare it to some European countries. Germany which is the most stable European country is at about 75-80%, and as was mentioned Greece is over 100%.

 

Also, when the US borrows money we pay about 2.2% interests, Italy pays about 6-7%, Greece pays over 26%!

 

I don't see how one can compare the US with Greece.

 

I also think the Euro is on it's way out, at least split between the northern and more industrialized nations, and then the southern countries.

[Know It All]

This video is spot on to BGC's link about European nations losing their sovereignty because of the Euro and explains why Greece is in a financial crisis along with the rest of Europe. Ignore the heading, it's not a conspiracy theory, just explains how the European crisis happened and how countries are losing their independence. Good video if you have the time.

 

[Bluegrasscard]

As I mentioned several months ago, the US debt is equals to around 35-40% of our GDP, which sounds a bit high, until you compare it to some European countries. Germany which is the most stable European country is at about 75-80%, and as was mentioned Greece is over 100%.

 

Also, when the US borrows money we pay about 2.2% interests, Italy pays about 6-7%, Greece pays over 26%!

 

I don't see how one can compare the US with Greece.

 

I also think the Euro is on it's way out, at least split between the northern and more industrialized nations, and then the southern countries.

 

Why do we pay only 1-2% interest? A: It is what the Fed (a non-government, private entity) is willing to accept - for now.

 

What would happen to the federal budget if the rate when to a 'normal' 4-5%? A: We look like Europe in a year or 2.

 

The Fed, which is the 'old money' of the early capitalist, has been holding interest rates down to help 'the situation'. But eventually they will want a return on what they have lent out. And, likely, the US deficit will explode.

 

In the meantime - refinance if you can! 3% mortgage rates are at least something to like in this.

[Bluegrasscard]

This video is spot on to BGC's link about European nations losing their sovereignty because of the Euro and explains why Greece is in a financial crisis along with the rest of Europe. Ignore the heading, it's not a conspiracy theory, just explains how the European crisis happened and how countries are losing their independence. Good video if you have the time.

 

 

Well, this answered my uncertainty about how this got going. The Greeks cooked the EU Euro books on the way in. Badly. The classic statement is at 26:30 - "...thats not a rounding error..." when talking about the Greeks estimate of government backed debt - 100M Euro is what was estimated. Due diligence found the correct value to be around 11 Billion (0.1 B vs. 11 B)...only 100 times off.

[coldweatherfan]

As I mentioned several months ago, the US debt is equals to around 35-40% of our GDP, which sounds a bit high, until you compare it to some European countries. Germany which is the most stable European country is at about 75-80%, and as was mentioned Greece is over 100%.

 

Also, when the US borrows money we pay about 2.2% interests, Italy pays about 6-7%, Greece pays over 26%!

 

I don't see how one can compare the US with Greece.

 

I also think the Euro is on it's way out, at least split between the northern and more industrialized nations, and then the southern countries.

 

I believe our debt is just under 100% of GDP and will top 100% this year.

[leatherneck]

That part can be paid. Those retirement benefits are paid by those employees during their work period, who put in a very generous percentage of their pay, and who DO NOT pay in to social security.

 

Evidently not all of the retirement benefits in Greece are being fully paid for by employees during their work period: http://www.nytimes.com/2010/03/12/business/global/12pension.html?pagewanted=all

[Bluegrasscard]

Evidently not all of the retirement benefits in Greece are being fully paid for by employees during their work period: http://www.nytimes.com/2010/03/12/business/global/12pension.html?pagewanted=all

 

From article:

 

“It’s not just Greece; all major European countries are facing pension shortfalls. It is a very difficult challenge because it involves selling pain to current voters.”

 

Lets correct that a little:

 

“It’s not just Greece; all major European countries and US state and local governments and Social Security are facing pension shortfalls. It is a very difficult challenge because it involves selling pain to current voters.”

 

There...now its correct.

[leatherneck]

What follows is another in a long line of rambling pontifications from LN:

 

While I am not the doomsdayer that some are in re comparing the US to Greece, I do think there is some cause for concern for future developments. My concern is based on the growing percentage of people that depend on some level or type of entitlements from the US govt. Unless I've misread what's going on in Greece, a large part of the outrage is based on the reduction of long standing Greek govt benefits to the workers in order for Greece to implement the austerity program it needs to attract money to avoid a default. When you have a large percentage of people who have long depended on entitlements, it's not a widely popular thing to reduce those benefits.

 

While the US govt may never technically default on its debt, I do believe that we are heading in a direction where our cost of borrowing will greatly increase (ironically we are benefitting, interest rate wise, from all the economic instability in other areas of the world. We are still currently the best bet for China to invest in, which makes our debt attractive to them, thus lowering our cost of borrowing. But I think it is extremely egotistical to think that always has to be the case in the future). If we have to deal with an increased interest component on our national debt service, we have one of two choices: either raised revenues (likely through increased taxes) or reduced spending (likely to first primarily hit military and national defense spending). Neither of those I think are good. Eventually however, those two methods of handling the increase interest cost could be exhausted. Taxes can only be raised so much (and with the percentage of people actually paying taxes decreasing, the increase in taxes on those remaining taxpayers will need to be dramatic, which could make the economic problems worse). Military spending can be cut no doubt, but how far without threatening our national security? Particularly in an era that China is dramatically increasing its military. And if dramatically cutting military spending means decreasing the number of folks in the military (as it likely would), if those folks can't find jobs, they go into the safety net. What then after taxes have been raised to the point they can't be effectively raised any further? What then after military spending has been cut to the bare minimum level needed? What then comes? Reducing entitlement programs. If we've gone too far in providing too much of a safety net to too many people, I can see a similar reaction in the US to what we are seeing in Greece. It is not an implausible possibility. Actually I think it's entirely plausible.

 

Has the safety net not grown as big as some might think? Here's one article to read and consider: http://www.nytimes.com/2012/02/12/us/even-critics-of-safety-net-increasingly-depend-on-it.html?pagewanted=all.

 

Yes it might take a village as some like to profess, but if the village is devastated by fewer and fewer workers needing to provide for more and more people not working and depending on the workers, has more harm been done in the noble attempt of taking care of those unable or unwilling to provide for itself? If more and more of Aesop's grasshoppers take the ants' winter storehouses, causing fewer ants to survive the winter and be able to accumulate the following winter's storehouses, doesn't the ant colony eventually collapse destroying not only the ants but also the grasshoppers?

 

Ask yourself this: if the grasshopper knew that the ant was required to provide for the grasshopper during the winter, would the grasshopper be more or less inclined to work during the summer to provide for itself during the winter? For those that have been alive for a while, have you noticed a change in human culture/in the attitude of people towards accepting a govt handout? From, "I'd rather starve then depend on handouts from the govt" to "how can I exploit the system to get more"? Fortunately, we still are a country of very hard working people, but would you say the percentage of Americans willing to work hard for everything they get and not be willing to depend on the govt has increased or decreased over the last 50 years? If it's a decrease, should that be of concern?

 

We've seen the Occupy movement recently. It was mostly peaceful. It was fueled by, in my opinion, the loss of jobs but with a strong govt safety net remaining in place. Would such protests remain peaceful if in the future not only were there large scale job losses but also a safety net greatly reduced in scope and degree-a situation similar to what is present in Greece today?

 

Being able to just print more dollars is not the cure all that some think it is. Printing dollars has a cost, and I'm not talking about the cost of operating the printing presses. There are many articles that can be found on the web about printing dollars not being the easy answer to solving our deficit problem, but due to its simplicity here is one of the best: http://www.msnbc.msn.com/id/7089510/ns/business-answer_desk/t/us-budget-deficit-fix-print-more-money/

[coldweatherfan]

Well said LN

[Know It All]

The title of this thread should be changed to "why keynesian economics fail."