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Brother, Can You Spare a Euro?

Posted By Daniel Flynn On September 22, 2011 @ 12:35 am In Daily Mailer,FrontPage | 7 Comments

Greece once gave Europe their philosophy, architecture, science, sport, and so much more. Now they give Europe their debt. Socialism can have that affect on a country.

Greece’s chronic crisis threatens to become worse. After promising budget-cutting measures to the European Commission, the European Central Bank, and the International Monetary Fund in exchange for more than $153 billion in loans, Greece has proved austere only in its implementation of austerity programs. Their creditors threaten to withhold funds until Greece makes good on its promises.

The crisis is at a crossroads. The country may opt to fulfill its commitment to slash spending in order to receive more aid. Or, it may reject the loan’s terms in order to spend away. While the paths may seem to go in different directions, they both ultimately arrive at the same destination. Greece runs out of funds next month, and with no sane lender eager to pour money into the basketcase economy, the nation necessarily conforms to the loan’s budget-slashing demands to get its cash infusion or by necessity cuts government because it lacks any money of its own to fund it. Greece either chooses austerity or austerity chooses Greece.

But many within the nation’s ruling socialist party don’t see it that way. “What our creditors are asking of the country is unthinkable,” reacted labor leader Yiannis Panagopoulos to the latest round of austerity measures. “A country is its people, and above all it is they that must be saved.” One needn’t even eavesdrop on the conversations of Greek leftists to stumble across rationalizations for not downsizing the state. Regarding Greece missing deficit targets, The New York Times reported Monday: “The reduced number of workers employed in the public sector would only add to the difficulty of meeting these targets as payroll tax collections shrink.” WTΦ?

Put another way, Times reporters claim that cutting the salaries and benefits of government workers would inhibit deficit reduction because the government would lose out on recouping through taxation a portion of the monies it pays out. That the outgoing payments dwarf the incoming revenues doesn’t seem to occur to the reporters. With uninterested parties making such outrageous accounting errors, it is unsurprising that interested parties within Greece would do so, too.

Pundits speculate that a Greek default may send the United States into another recession. A default is more likely to be a convenient external scapegoat than an actual cause. The Greek debt stands at about a half-trillion dollars. U.S. debt approaches $15 trillion. Greece isn’t too big to fail. The U.S. is too big to bailout. The weight of America’s enormous debt rather than the weight of another country’s enormous debt is the greater obstacle to U.S. growth. Greece is the warning of an iceberg ahead. It isn’t the actual iceberg, at least for the United States. Its creditors are another matter, and leaving them holding the bag, or forcing foreign taxpayers to bail them out, will have negative repercussions well beyond Greece.

On Sunday, Greek Prime Minister George Papandreou turned back from a trip to the United States so that he could hold an emergency meeting with his cabinet. When will the United States turn back from its trip to Greece?

Like Greece, the U.S. has seen its debt eclipse its gross domestic product. Like Greece, the United States has seen its credit downgraded. Like Greece, the United States has seen its president vaguely talk budget cuts, but offer concrete tax hikes. And like Greece, the United States has de facto defaulted: the former by depending upon others to service its debts; the latter, by devaluing its money through currency creation to purchase its own debt.

Greece’s crisis is a crisis of socialism. The public sector gobbles up 40 percent of gross domestic product. The state employs about one million of the eleven million citizens. Greece offers its people complimentary eye exams, college tuition, and child care. Despite the giveaways, and the contracting economy, the Mediterranean nation has embraced tax hikes as the primary means to escape the debt disaster. Several increases to the value added tax, surcharges to purchases of alcohol, a nationwide property tax, and an onerous levy on the wealthy are among the hikes instituted in the last two years. In the face of an economy going in the wrong direction and a borrowing debacle that threatens future borrowing, Greeks still don’t want to pay for what the government has been giving them. A freeloading state has bred a freeloading citizenry. So the protests of Greek leaders, like the street protests of Greek citizens, reek of an entitlement to money that isn’t theirs.

Ancient Greece was conquered by Rome. Modern Greece was conquered by socialism.


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