Athens, Greece looks like the return of the Peloponnesian War: riots, worker’s striking with homemade bombs hurled at police, students protesting, banks burned by anti-capitalists, and people killed. The hostility has halted trains and all flights and cruises to and from Greece are grounded. The fat lady is singing.
Greece’s excessive government spending has EU markets tumbling: Greece’s deficit rose more than 100% of its GDP, causing the Euro to fall to €1.706, its lowest in one year making the Dow Jones drop 1,000 points.
The EU demands Greece fix the mess before the Euro tumbles further.
Greece’s Prime Minister George Papandreou agreed to cut pensions and government spending, but wants tax-hikes to lower deficits. Unionized Greece is not happy: An estimated 60,000 Greek unionized workers refuse to comply with pension cutbacks and are destroying their country leftist-style: burning everything in protest.
Leftists routinely use physical force to destroy countries and economies.
In 2009, the EU’s deficit hit €77.2 billion Euros, 3.2%. Greece, along with Portugal, Ireland and Spain (PIGS), broke the Maastricht Treaty: EU nations cannot exceed a 3% deficit. In April 2010, Greece’s deficit rose above its GDP, escalating EU deficits. Now facing bankruptcy, Greece wants loans from the International Monetary Fund (IMF), a global credit union.
Greece asked Germany for €8.4 billion Euros. Germany must extend $415,000 per month for Greece to repay $10 million on the debt. According to the BBC, Greece owes the (IMF) €300 billion Euros ($400 billion) and wants €45 billion to start deficit lowering procedures.
Greece promises to drop their deficit from 12.9% to 12.7% within two years with IMF help and tax-hikes. The pledge has not prevented Greek bonds from plummeting in value. Papandreou is pushing socialist ideology, stating taxes must be hiked to pay down the deficit:
“The measures we must take…are necessary for the protection of our country…It is a patriotic duty to undertake this [tax-hike], with whatever political cost, which is tiny faced with the national cost of inaction … and indecision.”
Who knew Joe Biden’s patriotism inspired Greek thinking.
Deficits shrink when government spending stops. Tax increases trigger job loss, economic lows, and poverty. Last week, IMF leader Dominique Strauss-Kahn said Greece’s debt would cause the Euro-zone to collapse:
“What is at stake today is the economic situation of Greece. But it’s more than that. We also need to restore confidence…if we don’t fix it in Greece; it may have a lot of consequences on the European Union.”
“If the [bailout package] isn’t agreed, Greece is bankrupt…That [default on debts] would ripple though into a catastrophic default situation, that would then feed through into higher borrowing costs for the likes of Portugal, Spain and Ireland.”
The EU is suffering the consequences of collective government: As Michael van der Galien noted in his latest column “Greece on the Brink of Collapse,” Greeks spent their personal money as they saw fit, but government inflated spending and lending. Now Greece wants deficit cuts through government loans and tax-hikes.
Let Greece be a warning signal to America: Obama bailed out Wall Street and GM. If Greece does not receive sufficient IMF funding, they may come knocking on America’s door, doing what Erwin M. Stelzer warned in 2008,
“[force America] to go along with any European proposals for what is variously called a ‘new financial architecture’ and a ‘new world order.”
Will America accept the Trojan horse and have its own Greek tragedy?