Strengthening Constitutional Self-Government

No Left Turns

Economy

Europe's "Subprime Mortgage Syndrome"

Greece is about to be the recipient of a massive European "bailout." Upon converting its economy to the stable euro currency, Greece took advantage of its newly-padded credit rating (propped up by the reliability of northern neighbors such as Germany) in order to borrow heavily and spend freely. Of course, the economy seemed to flourish as Greece poured funds into the pit of an ever-widening, union-dominated public sector. But then the bills came due, and Greece was found to have spent a shocking 13% of its GDP - more galling still because the government released false financial statements to hide its soaring debt.

Even with a European bailout, Greece's long-term survival "involves painful structural reforms that may mean significant belt-tightening.... To that aim, Greece's new Socialist government is moving to increase the retirement age, cut competition for state workers and overhaul the broken tax system." However, as of today, Greek labor unions have begun to strike in protest of reforming the unsustainable status quo.

Anyone who doesn't see the parallels is not keeping their eye on the ball. Greece is both a subprime mortgage home-buyer and a union-bullied, overspent California. It has dolled out cash on projects it couldn't afford, and likely always expected that someone else would eventually foot the bill. The European nations are just beginning to learn the unpleasant lessons of single-state governance with irresponsible bedfellows - a reality shared by many red-state Americans. 

P.S. Europe's PIGS! Beppe Grillo's take on Greece and public debt mentions the derisive acronym "PIGS" being circulated in Europe as a reference to Portugal, Italy, Greece and Spain - the defaulting nations which are pulling down the rest of Europe.

Whether out of a sense of self-interest or self-preservation, some are calling for Greece's expulsion from the EU. I doubt that Germany and France would concede to such a financial risk and European embarrassment - but it is interesting that Europeans still see their union as open to disbarment.  

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