Greece Not Out of the Woods

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“Barroso, like all members of the European Commission, is unelected and unaccountable, and his approach exemplifies much that is wrong with the European Union today, including a sneering disdain for self-determination and a callous disregard for public opinion,” Gardiner writes. “Barroso’s plan is big government writ-large on a European-wide level, stripping power away from national governments, resulting eventually in a dramatic redistribution of wealth from richer EU countries to poorer ones, with northern Europe overwhelmingly footing the bill for bank failures in places such as Greece, Spain and Italy. An EU banking union will do nothing to address the Eurozone crisis, but it will significantly advance the power of the Commission over nation states, and erode the ability of national parliaments to regulate their own countries’ banks as they see fit, giving unprecedented powers to an EU cross-border supervisor.”

National sovereignty is anathema to the supra-nationalists. Nothing illustrates this more vividly than the avalanche of doomsday scenarios that have been predicted should Greece eventually leave the EU. Not because Greece’s economy, representing less than 2% of the European Union’s GDP, is particularly important, but because a financial meltdown there would likely be “contagious,” spreading to far larger economies like Spain and Italy, in turn leading to a continent-wide banking crisis or even an international one.

Thus, the banking community, from the ECB to the Bank of England and the U.S Federal Reserve had all promised to “take action” to stabilize financial markets in the wake of an “incorrect” Greek vote — meaning they were ready to inundate the markets with liquidity in all its Keynesian, delay-the-inevitable-debt-bomb glory. That flood may still occur if Greece fails to form a coalition government quickly enough to satisfy the markets. Massive amounts of future debt will be used to pay down existing debt, and despite all assurances to the contrary, the pressure to enact the kind of structural reforms necessary to break the cycle, will be eased. “Too big to fail” will remain the head of the spear for those thoroughly convinced that the reckoning of the socialist-driven, self-entitlement welfare state must be postponed virtually indefinitely.

The EU-philes and their financial enablers believe the Greek vote has bought them a reprieve. Yet a Reuters poll revealed that 35 out of 59 analysts across Europe and the U.S. expect Spain will need a “full-blown state bailout within the next 12 months,” and former UK Prime Minister Gordon Brown predicts France and Italy will need bailouts as well.

Yet these concerns are not just confined to Europe. The Congressional Budget Office (CBO) reveals where the United States is currently headed. “Under the assumptions leading to the most negative effect on GNP, debt would reach 250 percent of GDP by 2035. CBO’s model cannot reliably estimate GNP after debt reaches that amount, in the agency’s judgment: The assumptions about private saving and capital inflows incorporated in CBO’s model are based on historical experience, and if interest rates and the debt-to-GDP ratio rose to levels well outside of that experience, those assumptions might no longer be valid.” In other words, we’re 23 years away from our own date with incalculable fiscal chaos, courtesy of the same socialist-inspired hubris bringing Europe to it knees.

In the United States, we have been afforded the macabre benefit of seeing where the socialist end game is inevitably leading. Half the nation, ideologically speaking, refuses to believe it. It doesn’t get any more hubristic than that.

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  • JasonPappas

    Excellent summary. Let's add:

    1) There is no real "austerity" if by that word one means reduction in the bloated public sector. After a decade of expanding government expenditures, profligate southern European countries only made token givebacks. Read Veronique de Rugy.

    2) Most deficit reduction was achieved by massive tax increases which has caused a "private austerity" and helped deepen the economic downturn.

    3) Labor regulations prevent wages from falling to equilibrium levels creating unemployment and make southern nations uncompetitive. Business regulations discourage investment.

    4) Greece can't survive in the Eurozone and can't change its ways. The EU is just buying time to fix other problems then it will let Greece go under.

    5) The left is trying to manipulate Germany via WWII guilt but after absorbing East Germany (a much bigger cultural change) the Germans expect southern Europeans to lose their Commie ways, too. Ain't going to happen.

    6) Spain is the big problem now.

  • Sooke

    'Labor regulations prevent wages from falling to equilibrium levels creating unemployment and make southern nations uncompetitive."


    Spain has a youth unemployment rate of 50%.

    Yet, this insanity could be solved immediately by eliminating the minimum wage.

    Unemployment would disappear as wages fell until supply met demand. Tax revenue would rise and crime would fall. These young people need jobs, any jobs, at any wage to regain their self esteem.

    Singapore has no minimum wage, no unemployment, and a per capita GDP of $62,000.

    The answer is simple. All it will take are some politicians who are willing to fight the tyranny of the status quo.

    • guest

      And a HUGE ISLAMIC youth problem. Someone has to pay for them not to work! The Arab spring
      is going to be very expensive in health care, police, and courts. Who will deal with that?

  • ApolloSpeaks

    Don't get your hopes up that yesterday's election in deadbeat Greece will fix or change anything. Greece is broke and broken wanting the EU to bail it out after first lying its way into the Union then living beyond its means and spending itself into ruin. And Germany, understandably, will not do so without painfully stringent austerity measures to cut things to the bone (or cut into it) which Greeks are reluctant to do after partying like reckless teenagers for years.


    • ApolloSpeaks

      The Greeks want the party to go on (like Democrats here at home) with the EU footing the bill-because decades of screwball socialist indoctrination taught them that they're entitled to it. The good life is there's by divine right, and the great God of Government is obliged to provide it. If not the Greek government then Germany and others. For hard working Germany that's earned all of its wealth to cave in would be a MORAL HAZARD with country after country (Spain, Portugal, Ireland, Italy etc.) wanting an entitlement bailout too, thus creating a monstrous black hole sucking all of Europe into oblivion. What is the solution and salvation for Greece? Living like the monks on Mt. Athos.

      Click my name to continue reading article.

  • tagalog

    Enterprises that are "too big to fail" are, by definition, monopolies or trusts. They MUST be made to fail (go into bankruptcy and either go out of business or reorganiize to become more streamlined) because their size makes it impossible for competition to work properly in determining supply and demand. Without supply and demand operating according to human (i.e., market) forces, the value of things can't be determined. Without knowledge of the value of things, it is impossible to charge reasonable prices for goods and services. Without reasonable prices set by market forces, economic systems collapse. That is pretty close to being a law of nature.

    So Greece will fail, the European Union will fail, both will collapse, and that collapse may be worldwide.

    In the long term, the collapses will be a good thing; in the short term it will be horrible, worse than the Great Depression. We can only pray to God that He keeps us from slipping into totalitarianism during the bad years.

  • crypticguise

    Every day we read one more DELAY in the IMPLOSION of Greece, the Euro and the European Union (an oxymoron). There has never been a Nation of Europe.

    We all KNOW that Greece is bankrupt and will default on its debt. Why, oh why do these European Poiticians continue to suck the last remaining Euro from Germany? Oh… because they can.

  • Snorbak

    Economisits (supposedly) often astound me, if you have a liquiditity problem, you can fix it by borrowing money. When you have a solvency problem you dont fix it by going deeper into debt…..idiots.