This. +10. Eliminating the deficit so that revenue equals expenditures translates to a 1.2 Trillion shortfall in spending in a 14 Trillion dollar economy. That's a 9% contraction in GDP from "trimmed" Government consumption. Then, there's all the medicare, social security, welfare, defense and other parasites to kick off the dole (since 30% of the budget was eliminated). Then, it's a deflationary Depression where asset values (home, stocks) tank to shit, while the Boomers are lining up for Medicare/SS. Lest we forget a total gutting of the FIRE economy (aka Financial, Insurance, Real Estate) which accounts for ~22% of GDP, entirely based on leverage and ever increasing asset values. A deflationary depression puts most of these guys out of work. This cycle crushes Government revenues even more. Basically, a good 5 years of Great Depression. Perhaps a 30-40% contraction in GDP. 35%+ unemployment. A nightmare. And that's BEST CASE SCENARIO. If we go the inflationary route, we get the monetary unit destroyed, THEN deflation!! As Mithos says, this is all preamble for a new currency unit, a rip-off conversion a la Roosevelt (41% devaluation from old to new), decimated private capital, and all powerful Federal Government. Quite possibly a new, major war. This is where the North American Union fits in. This is it.
interesting for me is, that noone talks about Italy. All the time bevore the Euro Italy was the worst state in Europe. Interesting is also, that Italys goverment is conservative, Spain+Portugal+Greece is Socialist. So who started to bring down PGS ? And why not Italy.... Strange
The Socialists are not too different from the conservatives in Greece. The current Socialist administration is relatively new, and ironically, won the election based on socialist ideals like raising salaries for public sector employees. LOL Then they looked at the books from the prior Conservative administration and found $40 billion in additional debt recently. And a lot more other debt they were already aware of. And I'm not blaming the conservatives either. This debt has been accumulating for a couple decades - covering both parties - not unlike here in the US.
The Greece Credit Crisis: What You Should Know Published: Thursday, 11 Feb 2010 | 1:14 PM ET Text Size By: AP European and U.S. stock markets have encountered turbulence recently as investors worry about the debt crisis enveloping Europe, particularly in Greece. Macduff Everton | Ironica | Getty Images Here are some questions and answers on the Greece debt crisis and its wider significance. Q: Why is Greece's debt load - estimated at 123.3 percent of gross domestic product for this year - such a problem? A: Greece's debt load has stoked concerns in the markets that it will end up having a full-blown debt crisis. The risk is that it will not be able to get the money it needs to roll over expiring debt and pay off the interest on its rising debt burden, thereby triggering a default. The principal losers of a default would be those who have exposure to Greece, which includes other countries as well as banks in Greece and Europe holding Greek bonds. In the current globalized world, markets would zero in on the next weakest link - and it's this threat of contagion that has prompted EU leaders to consider ways of helping Greece. If a much bigger economy, such as Spain, gets into similar difficulties, the global impact would be much greater. Q: Other countries have large debt loads but no crisis, why? A: Japan has debt worth nearly 200 percent of its economy but no one is talking about a potential default. The main reason is that Japan has access to an abundant lending market - its own, the Japanese bond market. Italy also has a bigger total debt burden but its current annual borrowing of just above 5 percent of its gross domestic product is way lower than Greece's 13 percent, meaning that it does not need to tap international investors as urgently. However, if the EU does not douse the Greek fire, then it might not be long before Italy is in the market's crosshairs. Q: Don't some countries have low debt but a bad economy? A: Low debt levels do not necessarily mean that a country has a good economy. After all, one of the reasons why the Great Depression of the 1930s happened was a government obsession to balance budgets. Borrowing can be used to fund capital investments, which should reap returns in the future, and also support economies when times turn sour. When economies recover, these associated social payments for, say, unemployment benefits disappear - helping the budget return to balance. Q: The U.S. and UK have sharply rising debt levels. Is this a problem for them? A: It is a problem because borrowing costs money - especially if interest rates start to rise. Borrowing costs will not stay near zero percent in the U.S. forever nor at a record low of 0.5 percent in Britain. Since borrowing levels have to be brought down, there would clearly be an impact on spending programs. The next British government, whoever it is, will have to bring down borrowing levels and government spending will have to be reined in. Do hospitals get less money, or the schools? The choices are not palatable.
I hear the unions have negotiated 28 hour work weeks and massive social benefits. And there are only two private sector jobs for every government job. No wonder they are in debt up to their ears. The same thing is going to happen to the U.S. if we don't get rid of our current government bureaucrats.
The govt needs to win this staredown with the Unions. Simple announcement: "Starting today, and each and every workday, we are going to PERMANENTLY fire 1/2 of 1% of the most expensive/least productive workers, until there are a lot of new jobs available to new workers. Reagan fired the air traffic controllers years ago, when they struck illegally.
Legal-backing for unions has no place in a modern economy. The right to organize is fine. Legal protection during a walk-out is not fine. If Unions strike, employers should have the right to hire new employees. With legal protection, Unions have all the leverage. Producers are forced to suck up huge losses on walk outs until they choke up something the Unions like. It's blackmail and anti-free market. Public employee unions are even more destructive. Government workers do little, yet these guys strike routinely for even more pay, benefits etc. A cancer. Greece is a perfect example.
The unions rule Europe! AB INBEV wanted to fire a couple of hundred workers last month and they just closed the factory blocking the booze untill shops and bars ran out and the lay offs were retracted. lol Ofcourse even a child is aware of the longer term consequences of this but that's just the way it is over here. "The CEO earned 50 million euro in bonusses alone last year and now he wants to throw families out of their home, fuck that."
People keep asking their employers to give them 'more', what they should do instead is tell their governments to make life more affordable.
Keynsian economics has never been proven effective but it's really popular with the political class because it allows huge sums of money to go through their sticky fingers...