The Greek Crisis and the Reactionary Left


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I put this question to my investor friend, whom I’ll call Angel Ware, about the situation in Europe:

Any insights into the ramifications of the Greek crisis?

Here is his answer:

“Well, it depends. The first question is whether or not the EU (i.e.   Germany) will successfully be able to bail out the Greeks. There are  some significant forces conspiring to screw this up. 1. The Greek people  and their massive sense of entitlement. Even the threat of an austerity program has caused deadly riots and crippling strikes (including the  internal revenue department going on strike). 2. The German people and their sense of fairness. The retirement age in Greece (as subsidized by  the government) is 54. The retirement age in Germany is 67. You can imagine that bailing out the Greeks, so that they can preserve their retirement plan is not something that sits well with the German people. So, the EU & the IMF have temporarily stopped the bleeding, but will they be able to save Greece? Most people seem to be betting against that. Given that the Republicans have made major hay railing against the contagion stopping bailouts in the US (despite the fact that most were initiated by a Republican president), it’s hard to imagine that any politician will be able to sell contagion stopping bailouts of foreign countries.

The problem with Greece failing isn’t Greece (they are actually a very small economy). The problem is, as I alluded to above, contagion. It  turns out that Greece is hardly the only socialist country in Europe who has been funding massive social programs via massive debt. Specifically, if the bond market learns that the EU does not have the political will to bail out tiny Greece, then it follows that the EU will not have the political will to bail out the larger Countries (Spain being the scariest). As a result, the world may stop buying Spanish bonds. If the Spanish can’t sell massive amounts of new debt, they too will default. If Spain defaults, it’s virtually guaranteed that Portugal, Italy, and Ireland will default in short order. If that happens, all of these countries are the primary lenders to Eastern Europe, so look for a rash of defaults there too. If that happens, the UK is in deep trouble. If that happens, the US may be in serious trouble — if you thought the Lehman failure sucked, just wait for the Barclay’s and the Royal Bank of Scotland to fail as a result of the UK failing.

Now, the good news is that there is plenty of time between here and there for governments to get their acts together and keep the game alive (the game being that people buy bonds from countries with bad balance sheets due to the implication that they will be bailed out by larger governments with bad, but larger and better balance sheets). However, it could get considerably uglier. The other thing to keep in mind is that the last time that large European countries defaulted and couldn’t pay for their social programs, Hitler rose to power and we had WWII.”

Well, there’s a happy thought. It may turn out that the greatest tragedy of the 21st Century is that people failed to learn the lessons of the 20th. But then what else is new?

  • Kim Bruce

    And History repeats itself agains, and again, and again because we lose our sense of history. We become too wrapped up in our cozy little lives inside our cozy sacks with the belief that it will never happpen again, it will never happen here.
    I hear it so many times….Islam will never take over the world. There will never be a nuclear war.
    I am a product of the 60's. I was a "not far-left but middle-left hippie.
    I attended a few deomonstrations but meely as a peaceful protester.

    While in high-school I did a project on religions of the world and was absolutely stunned after studying the Koran.
    That is what turned my thinking around and, over the years, I have come to my senses on where the world is headed and what I can contribute to helping to stop this advance of evil.
    I read this morning that China, N. Korea and Iran are in an armaments-sharing pact.
    This is a very dangerous development for the west, particularly Israel. Especially when we also read right next to that article that Obama is trying to force Israel to surrender its arms? What is wrong with this man's head, well, other than the fact that he does way too bad drugs?

  • badaboo

    lol…. "middle left hippie "..that's precious . The notions that islam will never take over the world , or there will never be a nuclear war , both misguided to say the least , are not confined to reformed hippies or kids of the 60's. These notions are a result of ignorance , denial and intellectual laziness , and span the generation gaps and the entire political spectrum .
    What I find curious is the wave of revisionism that seems to be spreading in this country and how much of it I find on blogs of the right and the left . Yea , revisionism …the practice we used to attribute to those "commies ".

  • MKS

    Problem #1 – "The Greek people and their massive sense of entitlement."

    Too many people in the United States, and in other nations, have this same massive sense of entitlement, and it is endangering stability everywhere.

    "For one person to have a right to something he did not earn, someone else does not have the right to something he did earn." -Walt Williams

    We must restore the notion of the importance of property rights and civil rights, and we must find the best way to eliminate entitlement programs.

  • flyingtiger

    Greece is running out of money because they are supporting too many illegal immigrants who are mostly moslem. The simplest solution is to expell all moslems and illegal immigrants. This is the choice the Greek lefest have entitilements or moslems. You cannot have both. We are waiting your decision.

  • badaboo

    " massive entitlement " that's new to the lexicon , buyt you guys mak'em up as you go . Hey the Greeks are a DEMOCRACY ,and if they vote themselves a retirement age of 54 , where do you get ' entitlement " from that ? Why just because you have to wait till 62 ? They have a small economy , and if it would have been run right without corruption and mismanangement they wouldn't be in the fix they're in . It hasn't got a bloody thing to do with having a retirement age of 54 …… But that's the "conservative mantra " these days , People work their lives and when they retire you call it entitlement ,and that's just your line of B.S. What a ridiculously absurd notion . If they have the economy and the FREEDOM to make retirement age 54 , all the better for them , and if anyone is dumb enough to think THAT is what upset their economy , then well all I can say is …go buy some smart pills because you're in dire need of some .Oh , and btw , it wasn't the muslims either although I agree they should be kicked out anyway ….no put on your thinking caps .

    • guest1

      if it would have been run right without corruption and mismanangement they wouldn't be in the fix they're in

      and if my aunt had balls she'd be my uncle

      • badaboo

        Well your Aunt dont have balls and the Greeks are getting screwed due to our own F–K Ups on Wall Street , and their own corrupt government officials . Uh did you think AIG , Bear Sterns and the like were LOCAL ? Did you think that ours was the only economy they screwed up ?
        Get in touch with reality pal .

        • guest

          Pal, the reality is the Greek pension system allows a person 14 "monthly" payments over a 12 month period. This getting something for nothing is what is destroying the Greek economy. Putting in $12 and taking out $14 and leaving a $2 IOU. Those same people who "voted" for the 54 retirement age are the same people who keep voting for the corrupt politicians who are destroying that country and are the ones who are ultimately respnsible for Greece's sad state of affairs–stupidity on both counts!

  • Democracy First

    if the pension plans, whether government or private, fully support their payments, then there's no entitlement. But when they need to be subsidized by taxpayers, then that much is an entitement. Greek retirement pensions are not nearly covered by revenues against them. Hence, they are an entitlement, one paid for with borrowed funds.

  • badaboo

    They NOW are in risk of being subsidized by the taxpayers because of the screw up , and the subsequent bailout from the EU , which by the way is highly likely , else Portugasl , Spain and possibly Italy will go in the toilet . Better go do your homework , Greek retirements were not subsidized , they were EARNED , just like mine . And now they are put at risk , just like yours , due to crooks on wall street and their own governments corruption and mismanagement . Take off your right wing conservative blindfold and you may see what's really going on . Horowitz is blinded by his ideology and so are you .

    • Democracy First

      Very few, if any, national pension plans get enough worker contributions to actually cover payouts. Meaning, almost all are subsidized by those still working. The Greek pension plans were more heavily subsidized than most, which was the only way people could retire at age 53 with 80% of their monthly earnings. And thus other nations, Germany being most important, are reluctant to subsidize those Greek pensions, given that their plans only payout at age 65 (67 in Germany).
      There's a reason Greece is in bigger troub le than most: it's been far less financially responsible.

      • badaboo

        B.S. pal , US Social XSecurity Pensions , as well as private pension plans are paid for by the workers and companys who contribute . Or hadn't you noticed that on your ;paycheck or W-2 form ?
        The reasons these funds get into trouble are THREE=FOLD , -governments [like ours ] who treat them like piggy banks [ we presently owe SS about 1 trillion dollars , which over the years both bour "red " and "blue "politicians have tapped .SS benefits and pay deductions have changed over the yearts , and so too the max and min retirement ages …OR HADN'T YOU NOTICED THAT EITHER ?

        You "conservatives " talk a good line of bullsh_t , too bad it isn't based on fact or reality , it's simply part of your rhetoric . I have no doubts [if the politicos haven't wiped it out by then , that YOU TOO will be onb line ready to collect your SS benefits when you reach retirement age , so p[lease cut the B

  • Walt

    Badaboo

    I am always amazed with people like you that utter complete nonsense while actually believing they know what they are talking about. It is readily apparent that you did not major in economics nor logic while you were at finger-painting school, so please don't embarrass yourself by making further comments – you'll just confirm your lack of knowledge!

    • badaboo

      Walt , take off your blinders , and quit your memberhip in the J.P.Morgan you oughta be glad you got a job club " . Save your drivel for the rest of your conservative buddies . Oh , and stay amazed , as moist ill-informed are when thgey get exposed to the truth .

      • guest

        The truth is anyone who contributes to a public or private pension receives far more in benefits than is paid in even with the employer match in the case of SS.
        SS is unsustainable due to two things: 1. it being expanded beyond its oringal purpose and 2. demographics–to many retirees and not enough future workers to pay into the system. With low birth rates in Greece, their system also suffers from this demographic implosion.

  • solemnman

    An important factor in the equation is life expectancy.When sixty five was introduced ,as the retirement age in the u.s, life expectancy was…sixty five .It must have been anticipated ;that people would not live long enough to become a burden on the state and that most of what they contributed ,for their retirement, would be retained by the state for other purposes.
    The government got it wrong!! -because …that is what governments do.

  • badaboo

    solemnman , I guess you haven't noticed that SS deductions , that is the cap when the govt. stop SS deductions …remember when you reached it about the end of the year ? Guess what pal , many dont reach it anymore , and that is the adjustments made for the very thing you're talking about …..hadn't figured that out yet huh ?

  • gpcase

    Badaboo, you're full of piss and vineager today. It must be frustrating for you to believe you're the only one chatting on this blog with a command of the facts, and logic to boot. You're correct in alluding to the fact that the financial crisis had a major impact on Greece, but what you are missing is the fact that Greece made itself vunerable because of their heavy debt. By you placing 100% of the blame on greedy financiers, you avoid (deliberately, I think) the role leftist politicians have played.

    The conservatives are all saying the same thing: the pensions are not fully funded. True or False? The answer is true. Why this is so, and to what extent this caused budgets to go into deficit and for governments to resort to borrowing at unsustainable levels, has several factors. Here is where the controversy lies, not in whether or not Greece was ripped off by buying Lehman Bros. junk bonds – its the fact they they had to buy them to prop up their bloated bureaucracy that is the issue. But it does no one any good to turn a friendly debate into a platform for abusing those with whom you disagree. Mind your manners and be welcome here so we can learn from each other.

  • gpcase

    Correction: Greece sold bonds to raise money. The financial panic of '09 effected the rest of the world's ability to finance Greece's debt. Greece may or may not have owned some of these in their portfolio, I don't know. But the point remains that "greedy" financiers didn't directly take money out of Greec's treasury.

  • badaboo

    Horowitz can sit there spouting editorials bemoaning and wringing his hands in complaint about the pensions of other , THAT THEY IN FACT HAVE CONTRIBUTED TO [ just like he no doubt invests in the market ] Horowitz need not worry about any pension he may or may not have contributed to , because he 's rich from selling his books to you his faithfull . Hardly an unbiased and objective position

  • badaboo

    And YES , gpcase , the greedy morons on Wall Street , MOST CERTAINLY did .
    And what the heck do you mean when you say " not directly " ?????

    Are you serious ?

  • badaboo

    and p.s. gpcase , befoire you critisize , me , maybe you oughta look at some of the other posts . OR do you detect unfreindly words only in those views with which you disagree , ? You know , like Walt and a few others . But I guess bias has no boundaries huh ?