Home > economics, General, News, Political, Politics, Pre Pulse Ramblings > Greece May Be First EU Default – Bloomberg.com

Greece May Be First EU Default – Bloomberg.com


Dec. 9 (Bloomberg) — Former Bank of England policy maker Willem Buiter said Greece may be the first major country in the European Union to default on its debts since the aftermath of World War II.

via Former BOE Official Buiter Says Greece May Be First EU Default – Bloomberg.com.

With Dubai’s problems still claiming most of the media spotlight, not much has been reported of the problems in the EU countries, especially Greece.  Sadly, another country near and dear to me is in economic trouble.

While Dubai has a problem with a semi-government corporation structure, Dubai World, its sovereign fund is not in trouble.  The same cannot be said for Greece.  Greece, like most EU countries and the US, is a land where the government is involved in a host of spending programs that it should not be involved in.  Social spending is breaking the banks of every Western nation, and now Greece is on the verge.  Social spending is not constitutional nor it is a valid responsibility of government, for government obtains its funds from wage earners.  Hence, social spending takes monies earned by person A and gives it to person B under threat of imprisonment.  That spending however takes a bureaucracy to manage and thus the government spends, spends, spends and wastes resources.
 
It is certainly one thing for a country to spend on social programs when it is in surplus.  That spending is still immoral, but at least the country is not in debt or deficit mode.  However, when a country’s fiscal spending rolls into deficit and the debt climbs, if GDP is also not climbing, then this is a problem and the solution is to cut spending.
 
Sadly, the EU has it half right:  Greece needs to curb its spending, and it needs to do so with respect to social programs it cannot afford.  However, the recommendation to raise taxes is wooden headed.  Greece does not need to raise taxes any higher than they already are.  I recently returned from Greece and had the pleasure of spending some time with small business owners in Thebes (Thieva):  Brothers Jimmy and Nick of “Jimmy’s”, a Gyro pub along the main drag.  While both Jimmy and Nick asserted they made enough for a living, the taxes and regulations are killing them and they told me they intend to bolt Greece (to Canada of all places, yikes).  As I was sipping a beer and enjoying a Gyro one day with them, the Theban police stopped by and handed Jimmy a bill.  “Jimmy’s” has 2 small tables on the curb right outside their business, enough for 4 people to enjoy an outside meal.  Apparently a new tax law came into affect and those businesses with tables on the curb have an additional tax or fee assessed.  Clearly Jimmy told me he’d just move the tables back inside, but the point is the Greek government, as well as our own, are an anathema to business.  Thebes is about to lose a mainstay with Jimmy’s.  He pays the salaries of 4 employees, pays taxes, and pays his suppliers.  He’s leaving, and thus an economic success will be squeezed away from Thebes.
 
I think this again validates Art Laffer’s curve as those who can skirt taxes will do so… the owners of Jimmy’s will just leave and owe Greece and Thebes nothing.
 
Barry Soetoro is confused as to why businesses are not hiring more people.  Once again, the cluelessness of liberal officials is striking.  Could it be the reason why businesses are not  hiring is due to the massive attack on the private sector, wage earners, and families the left continues to ram through Congress?  Could that be the reason why businesses are skittish to increase their costs?
 
Get a clue liberals.  Your policies have now wrecked the fiscal reality of an entire country…and many more are in the wings…
FIL “FILVIS” RECHNITZER
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