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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