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Monday, July 6, 2015

Greece continues to give the finger to the EU.

Link:  Greek voters vote no on bailout referendum.

This past weekend, when most Americans were enjoying the holiday and I was watching my baseball team, the Houston Astros, lose twice to Boston, the proud people of Greece voted 61 percent to 39 percent to reject the most recent EU bailout offer.  Greek Prime Minister Alexis Tsipras was in the awkward position of opposing the bailout proposal, but also being the CEO of a country with no money.  Tsipras called for the referendum, probably so that he wouldn't have to take the blame, which ever direction the vote went. There's no reason to blame one individual Greek when you have the chance to blame them all, n'est pas?  When this story popped up on the Drudge Report, my first question was, which bailout is this?  How many Greek bailouts have we already experienced?  With all the bad press that is no doubt associated with having to ask for a huge loan from other countries just to pay government employees and retirees, one would think that the Greeks would take care not to get into this situation again.  But here we are.  Normally, I would rush to blame the leftist "spend spend spend" governments of Greece, but we've had both the right and the left in power over the last decade, and no one seems to be able to balance a budget.

I won't get into the numbers involved in the latest bailout offer.  The problem is easily explained without climbing into an Accounting 101 textbook.  The Greek government is broke, and can't pay its bills. As they have done in the past, the EU stepped in, and offered Greece a bailout package, if they would be willing to implement certain austerity measures.  Therein lies the rub.  The Greek people don't want their government to go broke, but they also don't want to put up with the austerity plan required by the EU.  Why does Greece seem to have trouble with its finances?  Its simply a case of a traditional Socialist economy that is collapsing under the strain of recession. Economies that are more diversified are in a much better position to survive economic downturns, and we've been in one for some time.  The Greek state has always been heavy on government interference in just about everything.  The Greeks have always had a large civil service, and one way or another, most Greeks find themselves dependent on a government check of some kind when payday rolls around.  When the economy turns sour, unemployment rises, manufacturing slows down, the government social programs become the lifeline for many people.  The Greek government spends way more money than in generates.  The only other avenue for raising the kind of funds necessary to keep a country of 10.8 million fed is to borrow from other nations.

According to Wikipedia, in 2013 the debt of the Greek government was 175.1 percent of its Gross Domestic Product. We are halfway through 2015, and the problem hasn't gone away. If the Greeks would accept the recent bailout proposal, and follow through on the austerity measures, it just might instill some discipline in the Greek government.  And if the Greek people don't want to repeat the unpleasantness of austerity, then they should elect governments whose FIRST OBLIGATION is to avoid ever being financially beholden to other nations ever again.  Instead, we have a history of the acceptance of bailouts, but the non-acceptance of austerity.  The Greek people need to learn the hard lesson, than one doesn't come without the other.  In this instance, nations aren't that different from people.  We all have budgets, and our goal is to not spend more than we make.  But some people get in trouble with high balances on credit cards.  In order for those folks to recover their financial comfort level, they must scrimp and save, avoid going out to dinner, no expensive vacation this year, etc., until the credit cards are paid off.  I learned this lesson in 1986, when I got my first credit card, which was for Marshall Field's high-end department store.  I probably had that card maxed out within the first two weeks.  I had lots of nice Polo shirts and cool watches, but I also had a huge debt to pay.  I suffered, and I had no extra money for some time, but I eventually paid off that card.  Today, it may seem cool to march around Athens, giving the finger to the EU and pretending that you have other options.  But Greece has no other options.  The money has to come from somewhere, or austerity will arrive ON ITS OWN.  Once the banks have no money, then people don't get paid.  That's when the riots usually start.    

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