Is There A Greek Tragedy In Our Future?

Greece is a highly socialist and quasi-capitalist country that is trying to operate within a capitalist environment. One-third of their workforce works for the government. The balance works to literally support all those government workers. That's because government workers are non-contributors to the economics of the country. In reality, they are leeches. And, like too many leeches attached to any body, the body will finally die for the lack of blood.

The blood letting really stems from the fact the unions are so strong in Greece. A union worker, working for the government, can retire at age 53 with full benefits and at their highest pay for life. This is unsustainable. Because of this and other factors, the Greek debt is now more than 90% of their total Gross Domestic Product (GDP). Please understand that this is not a percentage of "gross domestic profit" that would be capable of generating tax revenues for the country. Instead it is total value of the products that Greece produces and, from which, the actual taxable income is less than 10%. This, then, makes it almost impossible to pay back any debt without years and years of reduced spending and increased taxes. Making things worse, the Greek debt is so high, that the rating agency, Standard and Poors, has had to downgrade Greece to junk status for their bonds. This in effect has caused the amount of interest that Greeks pay on their debt to skyrocket; making it even harder for them to avoid defaulting on all their loans.

The European Central Bank (ECB) and the International Monetary Fund (IMF) have come up with the equivalent of $146 billion to bailout Greece. But, the money has strings attached. Those strings are primarily aimed at labor with mandated reductions in government worker pay and benefits; including retirement pay. Thus, the riots in the streets.

The ultimate survival of Greece lies in the hands all the unions. But, as you can see, the riots tell a story of a labor element within Greece that is not willing to budge on pay and benefits. So, it is my opinion, as well as others, that Greece will fail to recover. Ultimately, the European Union will have to shed Greece out of its need for self-preservation. Greece is a gangrenous appendage that could take down the rest of the European economic union, and as such, it must be amputated.

As a result of this excision, Greece will default on all of its debt obligations. No one will want to trade with that country without extreme guarantees or by forced higher prices for everything that the Greeks need to survive. That means that Greece will plunge itself into a deep economic (and, probably mental) depression with double-digit inflation. In effect, it will become a mini version of what this country looked like in the 1930's.

Is this outcome in our future? It might just be. In states like California, New Jersey, and Michigan and in so many others, the amount of unionized government workers with similar pay and benefits guarantees is very high. And, as we have already seen in California and New Jersey, the unions refuse to budge on any more cuts in jobs, pay, or benefits; while, in the non-government sector, people are sustaining heavy unemployment levels. To make things worse, this President and this Democratic Congress have poured billions into state governments vis a vis the Stimulus Package to keep them from making the needed, hard decision to cut back on any unionized government workers; including teachers, police, and firemen. But, the spending continues and their deficits keep increasing and a Greece-like situation is already sitting at their doorsteps; with our Federal government being the only recourse to keep these states alive. But, that too, could accelerate the country's path to higher and higher debt in less time than was previously thought.

I am concerned that we have the same problem ahead of us that the European Union is having with Greece and other countries like Portugal, Spain, and Ireland. Except, in our case, it is the very socialist nanny-states like California who will become our equivalent of the current Greek Tragedy. And, let's not forget, our national debt is expected to exceed Greece's 90+ percent of GDP by the year 2020 and become as high as 125% of GDP by 2030. So, if we don't heed Greece as the Skull & Crossbones warning in our path to increasing social programs, it won't just be California but this whole country that collapses.