Challenges facing Greece:
• Debt/GDP ratio of over 150%, forecast to be 170% by 2013.
• An uncompetitive economy with only two primary economic drivers: Tourism and shipping.
• Greek government revenue declined sharply in May 2011 while government spending rose sharply, leading to a large step backward and a further widening of the deficit.
• A government which is in turmoil and a population that feels betrayed by politicians and the Greek elite.
• Widespread public outrage against proposed EU/IMF austerity measures and state asset sales; 76% of Greek citizens believe government measures cannot fix the economy, 74% of Greek citizens want a renegotiation of the 2010 bailout terms.
• A culture of pervasive tax evasion which won’t change overnight
• A bloated & inefficient public sector which has run up a significant percentage of the debt that currently plagues Greece
• The last and probably most controversial bullet point – A failure of the private sector in Greece to move the country forward and to become competitive with other EU economies. Greece suffers from entrenched cultural handicaps such as the widespread practice of nepotism in corporations and small businesses. Say what you will about the United States, the great strength of American business is a culture of meritocracy which has rewarded the best and the brightest who have achieved and innovated. Young talented Greeks who do not benefit from having a wealthy pedigree aspire to work in the public sector, not the private sector. This is the polar opposite of the United States where highly skilled/talented individuals strive to remain in the private sector and to start their own businesses...
...EU leaders have one last chance to at least attempt to save the euro-zone by cutting Greece’s debt in half and spreading the losses around throughout all parties involved (ECB, EU, private creditors i.e. banks etc.) and creating a federal fiscal authority similar to the US Treasury. Of course, there is much more to be done but this would be a good start...
Of course, there is little chance that will happen. The reason for the months of can-kicking is simple: recognizing a Greek debt default would touch off a banking contagion and -- ultimately -- recognition that Europe's remaining socialist welfare states are all headed into the crapper.
Mohammed El-Erian, the head of the world's largest bond fund, said early today that something's got to change because throwing more money at the problem simply isn't working.
“After a year, every indicator has unfortunately worsened, despite the incredible quantity of financial assistance,” he was quoted saying...
"All of this has terrible human consequences and it's associated with a transfer of liabilities from private creditors to European taxpayers. Why? Very little is being done to deal with the excess of public debt, and the conditions for higher growth are not being put in place," he said. "Further on, if this approach is kept up, more money will be wasted to save private creditors and the risk of a disorderly restructuring of the debt will be greater."
Greece is bankrupt.
Loaning it more money is insanity, plain and simple.
And this is America's future, should sane leaders -- Constitutional conservatives -- not grab the reins of power. And fast.
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