Posts Tagged ‘debt crisis’

What Leftists Are Best At: Socialist Obama Blames Bush For All His Problems; Socialist Greece Blames Germany For All Its Problems

February 16, 2012

Barack Obama is entering the fourth year of his presidency blaming George Bush.  Think about that; the man has never once during his entire presidency taken personal responsibility.  Not ONCE.

But that’s really par for this golf course; it’s just what socialists do.

Greece thinks all of its insane spending and refusal to see the cliff rushing up on them while they stupidly continued acting like Democrats in America is all Germany’s fault.  Because, you see, Germany won’t give them more stupid money so they can keep being stupid.  The Germans have money; and of course you know the script: the rich are ALWAYS to blame.  Even if they’re in a whole other country:

Greece and Germany’s he said/she said over debt crisis
Berlin sees Athens as not living up to its end of the bailout bargain; Greece perceives a campaign of punishment by the Germans on its already-reeling economy.
By Henry Chu and Anthee Carassava, Los Angeles Times
February 14, 2012, 7:47 p.m.

Reporting from Berlin and Athens— To hear many Germans tell it, Greece is a land blessed with sunshine but cursed with a lying, cheating government that routinely breaks its promises and expects others to pick up the pieces.

The rest of Europe has doled out billions of dollars in emergency loans to keep Greece afloat, but Athens, the Germans say, has consistently failed to deliver on pledges to slash its bloated bureaucracy, sell off state enterprises, go after tax evaders and overhaul its uncompetitive economy.

Yet ask Greeks what’s happening to their country, and many respond with yowls of pain and anger — directed in large part toward Germany. Berlin, they fume, is a tyrannical taskmaster whose only motivation now seems to be to inflict as much punishment as possible on a country whose economy has already been pushed into free fall.

“What more do they want from us?” said Sophia Sigri, a 70-year-old pensioner in Athens. “This crisis has gone way beyond numbers, fiscal policies and austerity measures. Our national dignity now is at stake. Do they want to rob us of that, too?”

The divergent views have become the backdrop against which Europe’s long-running debt crisis, now in its third year, is playing out. And the fact that such attitudes appear to be hardening in Berlin and Athens, with animosity and distrust deepening on both sides, is complicating the search for a solution.

Finance ministers of the 17 Eurozone nations are scheduled to consult Wednesday in a conference call that investors hope will result in the provisional approval of a second bailout for Greece, worth about $170 billion. Without the rescue package, the country could slide into default by mid-March, with potentially disastrous consequences for the global economy.

But many in Athens believe that present conditions aren’t much better.

Though acknowledging that their government has missed some of the tough financial targets set by international lenders, they say the repeated rounds of stiff austerity cuts have resulted in a spiraling recession during which homelessness, hunger and suicide rates have all gone up.

Public outrage boiled over this week into some of Athens’ worst rioting since the start of the crisis in 2009, with dozens of buildings set afire and trashed by rock-throwing youths alongside a peaceful demonstration by thousands. Greek lawmakers swallowed hard and bowed anyway to the demands of their European partners, approving drastic cuts in wages and pensions and the elimination of 15,000 public-sector jobs this year alone, at a time when the unemployment rate already tops 20%.

German and other European officials welcomed the measures. But they warned that they are not enough for them to approve a second bailout Wednesday, insisting that Greece identify $430 million more in spending cuts and seal a deal with private investors on taking a loss on their holdings of Greek debt.

To those Germans who regard Greeks as mendacious, cavalier shirkers of duty, critics point to figures like those released Tuesday showing that, in the last quarter of 2011, Greece’s economy contracted by a whopping 7% compared with the same period a year earlier.

Many Greeks have already made heavy sacrifices as the result of one governmental austerity measure after another. The citizens of any other developed country, they say, would surely erupt in anger as well if confronted with the same calamitous drop in their standard of living.

Anti-German rhetoric and images are now a staple in Greece, where politicians mutter darkly of German jackboots and protesters call Chancellor Angela Merkel a Nazi.

“You’d think they would show some compassion for the fact that we went gentle on them after World War II. But no, they want to punish us now,” declared Fotis Stathatos, 56, an unemployed construction worker.

Germans bristle at such statements, even as they speak of the need to get even tougher on Greece. Athens is no longer a trustworthy partner but rather a huge sinkhole, many Germans say. They complain that Greek officials have happily accepted outside help while shrugging off solemn promises to lay off thousands of civil servants, privatize state assets and strengthen tax collection.

The lack of follow-through has prompted suggestions from Germany — unwelcome in Greece — that a European Union commissioner be given power over Athens’ budget and that a separate escrow account be set up to earmark government funds for repaying debt and not for frivolous spending elsewhere.

“The only thing we require is that Greece stick to its commitments,” Michael Georg Link, Germany’s deputy foreign minister, said in an interview in his Berlin office. “Nobody was forced into the European Union, and we will force nobody out of the European Union or the Eurozone. But once you’re in, you have to stick to the rules.”

Link said that Italy, Spain and Portugal have also made commitments to difficult reforms.

[…]

In Athens, residents stretched to the breaking point have grown tired of being repeatedly told to do more to atone for their financial sins. Further rage of the kind that broke out this week could await a country already teetering on the brink of economic ruin, some analysts warn.

“Greeks feel like they are being spanked for behaving badly. They’re still feeling the pain of that,” said Dimitris Mavros of the MRB polling company. “But once that beating stops or subsides … then they may strike back.”

Damn rich Germans who won’t keep pouring their hard-earned money down a sink-hole to fund liberals in their moral and mental insanity.

Of course, liberals call Republicans horrible stuff too, like “terrorists” and “demons.”  Because if you try to stop a Democrat from spending other peoples’ money, they get real nasty the way crack addicts get nasty when somebody is standing in the way of their crack.

But of course it’s even easier for Greeks to call Germans who won’t give Greece more of Germany’s money “Nazis.”

When you see all the rioting and burning and violence, you know that it’s just around the corner here as “Occupy” fascists plot the same kind of crap the Greek fascists are plotting now.

For the left, violence has ALWAYS followed the demonizing.

Let me tell you something: Greece didn’t have to come to this.  The problem was they kept seeing warning signs and kept on ignoring them.  Just as the Democrat Party and Barack Obama are doing right now in America.

If Greece had taken responsibility a few years ago and made relatively small and simple changes, they could have averted all of this terrible pain now.  But liberals in Greece demonized such modest reforms, just as liberals in America have been doing.  And as a result nothing got changed and then all of a sudden it was too late.  The same way that one day real soon it’s going to be too late here in America.

We either get these liberal vermin out of office, or we’ll be in the sad way that Greece is because IT didn’t bother to get rid of its liberals until it was way, WAAAAAAY to late.

Consider Social Security and Medicare: America’s actual debt is over $211 TRILLION.  There is no way in a thousand hells we can possibly ever pay that back.  Democrats cursed us with this mess; conservatives tried to warn them.  If you go back to the 1930s when FDR was ramming his political boondoggle ponzi scheme through Congress, you’ll discover that even DEMOCRATS warned it would ultimately be a disaster. Meanwhile, Medicare – the socialist takeover of health care began in the 1960s that Obama wants to now replace with his even BIGGER socialist takeover of health care – WILL go bankrupt no later than 2017 and cause catastrophic death in the population of seniors who depend on it.

Republicans have tried to propose fixes that would save both programs, but this is the thanks they get:

Democrats demonize Republicans – I mean LITERALLY demonize, given the whole “demons” thing – whenever we try to do the right thing.  They call us “terrorists” for trying to slow down the insane rush to spending.  I mean, how DARE we block the “progress” they’re trying to make.

They count on the American people with pathetically stupid brain-dead zombies with no intelligence and no memories so we won’t remember what Democrats were like when Bush was in power and he was trying to push through much-needed reforms:

The Left now acts as if this never happened. For instance, in a recent television appearance, liberal commentator Bill Press argued that–rather than noisy disagreement–”Americans want discussion” on health-care reform. Who could disagree with that sentiment–except, perhaps, the Obama administration, which pushed Congress to rush through legislation by early August? This timeline was clearly aimed at preempting discussion and presenting the public with a “done deal” on health reform. As one protester put it, the president spent more time choosing a dog than he did discussing health-care reform.

Likewise, Mr. Press complained that opponents hadn’t put their own reform plans on the table. “The people who are there to protest–what are they for? Are they for the status quo? The Republicans haven’t put any other plan on the table.” But did congressional Democrats offer their own alternative to President Bush’s 2005 Social Security plan? When a fellow Democrat asked Rep. Nancy Pelosi when their party would offer its own Social Security plan, her answer was “Never. Is that soon enough for you?” Democrats would not even negotiate until personal retirement accounts were taken off the table. Why should Republicans act differently today, regarding the “public option”?

Did you know that George Bush tried SEVENTEEN TIMES in one year to reform Fannie Mae and Freddie Mac?  You know, when reforms and regulations of the out-of-control GSEs would have actually prevented the implosion we had in 2008 that Republicans and conservatives had repeatedly warned us about???

We’re going to be Greece soon for the same reason that Greece is Greece now.  Because we’re just too damn stupid and depraved to get rid of our liberals.

Greek Crisis Coming To Your Neighborhood Soon

February 21, 2010

Let me summarize what is going on: the Western world (and most definitely the United States) is playing the subprime loan game.  We’re not talking about a few schmucks; we’re talking about the whole country.

We’re borrowing huge sums of money at a current rate of about 3% interest.  But as the lenders start getting nervous, they’re going to want to increase that interest.  We are in plenty of trouble paying these trillions of dollars back at 3% – but what happens if the interest increases to 5% or 7% as it could very quickly do?  The costs of paying these loans would rise to catastrophic levels, and we could find ourselves literally bankrupt overnight.

That’s what happened to Greece.  And it’s what’s ultimately going to happen to the USA.

A Greek crisis is coming to America
By Niall Ferguson
Published: February 10 2010 20:15

It began in Athens. It is spreading to Lisbon and Madrid. But it would be a grave mistake to assume that the sovereign debt crisis that is unfolding will remain confined to the weaker eurozone economies. For this is more than just a Mediterranean problem with a farmyard acronym. It is a fiscal crisis of the western world. Its ramifications are far more profound than most investors currently appreciate.

There is of course a distinctive feature to the eurozone crisis.  Because of the way the European Monetary Union was designed, there is in fact no mechanism for a bail-out of the Greek government by the European Union, other member states or the European Central Bank (articles 123 and 125 of the Lisbon treaty). True, Article 122 may be invoked by the European Council to assist a member state that is “seriously threatened with severe difficulties caused by natural disasters or exceptional occurrences beyond its control”, but at this point nobody wants to pretend that Greece’s yawning deficit was an act of God. Nor is there a way for Greece to devalue its currency, as it would have done in the pre-EMU days of the drachma. There is not even a mechanism for Greece to leave the eurozone.

That leaves just three possibilities: one of the most excruciating fiscal squeezes in modern European history – reducing the deficit from 13 per cent to 3 per cent of gross domestic product within just three years; outright default on all or part of the Greek government’s debt; or (most likely, as signalled by German officials on Wednesday) some kind of bail-out led by Berlin. Because none of these options is very appealing, and because any decision about Greece will have implications for Portugal, Spain and possibly others, it may take much horse-trading before one can be reached.

Yet the idiosyncrasies of the eurozone should not distract us from the general nature of the fiscal crisis that is now afflicting most western economies. Call it the fractal geometry of debt: the problem is essentially the same from Iceland to Ireland to Britain to the US. It just comes in widely differing sizes.

What we in the western world are about to learn is that there is no such thing as a Keynesian free lunch. Deficits did not “save” us half so much as monetary policy – zero interest rates plus quantitative easing – did. First, the impact of government spending (the hallowed “multiplier”) has been much less than the proponents of stimulus hoped. Second, there is a good deal of “leakage” from open economies in a globalised world. Last, crucially, explosions of public debt incur bills that fall due much sooner than we expect.

For the world’s biggest economy, the US, the day of reckoning still seems reassuringly remote. The worse things get in the eurozone, the more the US dollar rallies as nervous investors park their cash in the “safe haven” of American government debt. This effect may persist for some months, just as the dollar and Treasuries rallied in the depths of the banking panic in late 2008.

Yet even a casual look at the fiscal position of the federal government (not to mention the states) makes a nonsense of the phrase “safe haven”. US government debt is a safe haven the way Pearl Harbor was a safe haven in 1941.

Even according to the White House’s new budget projections, the gross federal debt in public hands will exceed 100 per cent of GDP in just two years’ time. This year, like last year, the federal deficit will be around 10 per cent of GDP. The long-run projections of the Congressional Budget Office suggest that the US will never again run a balanced budget. That’s right, never.

The International Monetary Fund recently published estimates of the fiscal adjustments developed economies would need to make to restore fiscal stability over the decade ahead. Worst were Japan and the UK (a fiscal tightening of 13 per cent of GDP). Then came Ireland, Spain and Greece (9 per cent). And in sixth place? Step forward America, which would need to tighten fiscal policy by 8.8 per cent of GDP to satisfy the IMF.

Explosions of public debt hurt economies in the following way, as numerous empirical studies have shown. By raising fears of default and/or currency depreciation ahead of actual inflation, they push up real interest rates. Higher real rates, in turn, act as drag on growth, especially when the private sector is also heavily indebted – as is the case in most western economies, not least the US.

Although the US household savings rate has risen since the Great Recession began, it has not risen enough to absorb a trillion dollars of net Treasury issuance a year. Only two things have thus far stood between the US and higher bond yields: purchases of Treasuries (and mortgage-backed securities, which many sellers essentially swapped for Treasuries) by the Federal Reserve and reserve accumulation by the Chinese monetary authorities.

But now the Fed is phasing out such purchases and is expected to wind up quantitative easing. Meanwhile, the Chinese have sharply reduced their purchases of Treasuries from around 47 per cent of new issuance in 2006 to 20 per cent in 2008 to an estimated 5 per cent last year. Small wonder Morgan Stanley assumes that 10-year yields will rise from around 3.5 per cent to 5.5 per cent this year. On a gross federal debt fast approaching $1,500bn, that implies up to $300bn of extra interest payments – and you get up there pretty quickly with the average maturity of the debt now below 50 months.

The Obama administration’s new budget blithely assumes real GDP growth of 3.6 per cent over the next five years, with inflation averaging 1.4 per cent. But with rising real rates, growth might well be lower. Under those circumstances, interest payments could soar as a share of federal revenue – from a tenth to a fifth to a quarter.

Last week Moody’s Investors Service warned that the triple A credit rating of the US should not be taken for granted. That warning recalls Larry Summers’ killer question (posed before he returned to government): “How long can the world’s biggest borrower remain the world’s biggest power?”

On reflection, it is appropriate that the fiscal crisis of the west has begun in Greece, the birthplace of western civilization. Soon it will cross the channel to Britain. But the key question is when that crisis will reach the last bastion of western power, on the other side of the Atlantic.

The writer is a contributing editor of the FT and author of ‘The Ascent of Money: A Financial History of the World‘

The United States is on life support, and it won’t be long before the doctor turns off the machine and calls the time of death:

It is now mathematically impossible for the United States to repay its debts, even if every single penny was seized from every single man, woman, and child, from every single bank, and from every single business.

This is our future, assuming we can stave ff the fate of Greece:

“Within 12 years…the largest item in the federal budget will be interest payments on the national debt,” said former U.S. Comptroller General David Walker. “[They are] payments for which we get nothing.”

Economic forecasters say future generations of Americans could have a substantially lower standard of living than their predecessors’ for the first time in the country’s history if the debt is not brought under control.

Greece’s budget deficit-to-GDP is an astonishing 12.7%.  And that massive unsustainable spending is the thing that is killing them.  But we shouldn’t laugh: ours is at 11.2%, according to Goldman Sachs:

We now expect the US budget deficit to rise to $1.64 trillion (11.2% of GDP) in fiscal year (FY) 2010 and to total $10.8 trillion (trn) over the next ten years. This profile is modestly above our early October forecast and well above the administration’s figures.

Even so, near-term risks lie to the side of a bigger deficit. Tax receipts have started the year in a deep hole and could continue to fall short. And if the economy struggles as the current dose of fiscal stimulus wears off, as we expect, then policymakers are apt to adopt more stimulus than we have assumed.

The United States is sixth on the list of countries with the highest ratios of budget deficit to GDP.  And the other countries are PIIGS (Portugal, Ireland, Italy, Greece, and Spain).

About the only thing separating us from the fate of Greece right now is the fact that we can keep printing our own currency until we plunge right off the economic cliff.

One morning we’re going to wake up and learn that our currency isn’t worth the paper it’s printed on.