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Thoughts on the Greek Madness

Anyone who has lived in Greece can see why the question of default or a “haircut” is not a matter of if, but when. It is a wonder that crazy things have lasted as long as they have there. The symptoms are well known: Tax evasion is now an art form and a matter of pride; pensions are absurd to the point of caricature; the public sector is self-righteous, bloated, and inefficient; and what little industry there is does not meet European standards of efficiency and productivity.

Greece has a wonderful climate and rich soils, but few vast expanses of agricultural land, and farming has so many built-in cultural and political impediments that vine, tree, grain, or cotton agricultural productivity lags far behind comparable farming in the states, Australia, or western Europe. All this unfolds amid a landscape of a naturally beautiful, but otherwise largely resource-poor country, whose majestic disparate terrain poses enormous problems for communications, transportation, and infrastructure. Tourism, EU membership, and the Olympics all brought scarce capital to the country, but not enough to match a rising entitlement attitude among the public that can in a nanosecond adduce all sorts of complicated and Byzantine arguments why the standard of living in Greece must be roughly comparable to that found in a Germany or Scandinavia — or else.

Even more disturbingly, the ongoing crisis is amid a regional landscape in which an ascendant (and fellow NATO ally) Turkey has decades-long disputes with Greece over Cyprus, territorial claims in the Aegean, and overflights of Greek airspace at precisely the time when budgetary implosions are forcing Greek defense cuts; the country is shrinking and its mountain villages are emptying; its allies in Europe are completely turned off by serial Greek recriminations; and four-decades of cheap anti-Americanism has eroded almost all U.S. goodwill to the country.

Finally, there is no way out except either sudden or gradual default because of the complex mentality of a xenophobic Greek public that assumes expansionary entitlements as an earned birthright and would treat any who would cut them as some sort of existential enemy. That narrative works out to something like a greedy predatory northern European or American bondholder wanting to pile up even more needless profits by enforcing quite unfair and amoral terms of payback on the courageous, brave, and long-suffering Greek collective.

Once a society descends into that mindset, there is little alternative but the get-real shock therapy of default, which, in the Greek case, would return it to something like the early 1970s when I first visited: a nonconvertible, widely fluctuating drachma, a standard of living more akin to the southern Balkans or western Turkey than France or the Netherlands, a vibrant black market in money exchanges, tight controls on the possession of foreign currencies and a curtailment of imported goods, and very little new infrastructure construction or repair.

The Hellenic disease in its lesser forms is spreading here in California, where entitlements have soared, illegal immigrants have vastly increased, and pensions and benefits of public employees have skyrocketed, while investments in infrastructure were largely neglected to fund redistributive payouts — all at a time when the affluent, income-tax-paying, and job-creating minority are leaving the state. The therapeutic California attitude is similar to the Greek in which even the slightest suggestion of cutbacks evokes class-warfare and a litany of sanctimonious reasons why more, not less, public funds are critical for all sorts of victimized categories.

As for now, Californians can enjoy the semblance of 21st-century living thanks to the state’s lingering advantages — the fumes of once-vibrant gas, oil, and timber industries; a highly productive agriculture sector that arose in the 1960s; the Napa Valley explosion of the 1980s; far-seeing investments during the 1950s and 1960s in infrastructure; Silicon Valley; and weather and geography conducive to tourism — and despite, rather than because of, state governance. That the state is dreaming of a new first-stage, multi-billion-dollar high-speed-rail link from Fresno to Corcoran (where Charles Manson resides), while its main north-south “freeways” such as the 99 and 1010 are congested, sometimes non-driveable, and have long expanses of two-lane, pot-holed surfaces, with cross traffic instead of on and off ramps, is symptomatic of how hard it would be to save our state.

New on The Corner. . .


COMMENTS   31

EXPAND  

   06/16/11 10:24

During the recent German Chancellor's visit to Washington President Obama hinted that the United States might support a Greek bail out with Germany leading the EU.

Wonderful.

American taxpayers can now work until they are at least 75 years old in order to support 50 year old Greek retired government workers just so riots stop.

Just wonderful.

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jshie
   06/16/11 20:17

You hit the nail right on the head!

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 NK
   06/16/11 10:28

Soon we will all be Greeks and Californians-- except, Texas and the Dakotas, they secede.

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Frustrated
   06/16/11 10:28

I don't get it. Where does Greece think the money is going to come from? Sure they can default on their loans, not pay them back. But that can only happen once. No one will lend to them afterward. Europe doesn't have the money, we don't have the money. What then? I have Greek heritage and have an opportunity to visit next year, but I won't given the current circumstances. It's a shame, a once great society taken over by sloth. At least California has the fly-over states to support them when they go belly-up. Greece, Greece has no one else to look to for another hand out. I just don't get it.

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   06/16/11 11:40

Liberals have managed to convince themselves that there are huge sums of money out there.
Evil multi-national corporations are stealing our wealth, once we raise taxes we can get it back and all be rich.
Evil rich people are exploiting the poor, all we have to do is raise taxes to get that money back and we can all be rich.
Evil capitalist countries are exploiting us, all we need are currency controls and laws banning immigration and we can all be rich again.

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larrytex56
   06/16/11 13:15

"At least California has the fly-over states to support them when they go belly-up."

NOT!!!

No way in Hades that I'm going to want my Federal tax dollars to bail-out the la-la land that California has become. They can stew in their own nonsense.

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tagalog1
   06/16/11 14:48

Wait until the Californians migrate out of their state to yours, the way they did to Colorado. Watch your red state become a purple or even blue state as they try to replicate California in your state.

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Gogo
   06/16/11 16:05

It is really sad what is happening to Colorado. And it is not just people from California. The top 3 places people are leaving to come to Colorado are California, Illinois and Michigan. All states being run into the ground by liberals. People in every red state talk about liberals fleeing the mess they have made only to recreate it in another state and never ever learning that it is their own fault. Colorado is the only state to vote down an amendment to prevent Obama Care in the state out of all the states that voted on such amendments. I guess people here want some unelected official in DC to decide their health care for them.....stunning.

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Ann NY
   06/17/11 00:39

That's exactly what happened to Nevada. They went from Paul Laxalt to Harry Reid.

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EscondidoSurfer
   06/16/11 22:15

All you taxpayers must bail us out. It is the only way out for us. The way to do it is to tax the beneficiaries of your largesse. Place an excise tax on excess government pensions (you pick a number). It is time to tax the rich and no one is as rich as those with a cola charged public pension and full benefits at 60.

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oldhoo72
   06/16/11 16:12

"but that can only happen once, nobody will lend to them afterward"
Sadly, this is not true. A number of sovereign countries have defaulted on their debt and lived to borrow another day. See External Link 

The real question is: Why do we suckers continue to lend?

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Phil Goetz
   06/18/11 15:05

According to External Link  :

Federal tax dollars received per tax dollar collected in 2005:

Arkansas $1.41
Missouri $1.32
Kansas $1.12
Arizona $1.19
Kentucky $1.51
Montana $1.47
Oklahoma $1.36
Nebraska $1.10
Wyoming $1.11
New Mexico $2.03
Utah $1.07
California $.78

Looks like the best thing California could do to solve its budget problem, is cut loose and stop supporting those fly-over states.

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   06/16/11 10:56

The Greeks ought to know better than any other people the consequences of hubris, having invented the concept.

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   06/16/11 11:14

This is deeply ingrained in the Greek mindset. All the reformers in ancient Greece, all the way up through Dracon. One of the first things that the demagogic leaders promised, and did, in order to become tyrants, was to force the rich to forgive the poor's debt. It happened several times, and we see that nothing really has changed in 2500 years among the Greek peasantry.

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Wesley J. Smith
   06/16/11 11:37

As a born and bred Californian, currently residing in the SF Bay area, VDH is being laudably understated. Add in a radical legislature, educators more interested in political indoctrination than reading, and the political aortic artery of the state flowing directly out of San Francisco (both U.S. Senators, governor, lieutenant governor, AG, House Minority Leader, the most influential Assembly Members and State Senators) and the future looks very bleak indeed.

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   06/16/11 14:07

The Greek air force's mascot is Icarus. That should pretty much tell us all we need to know...

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tagalog1
   06/16/11 14:46

VDH is dancing around the one hopeful sign of the Greek and American financial crises: we are in the process of learning how hard people will fight, and how delusional about the state's resources they get, when government sets up a system of entitlements in a attempt to become a welfare state, than loses its ability to remain so. Once this fight ends in defeat for the delusion, we will have learned how morally and actually bankrupt command-system economies, welfare states, and the concept of "from each according to his abilities to each according to his needs" are.

Once we've learned that, we can move on to live in a society that is oriented toward the realities of life.

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 RobL
   06/16/11 15:11

The folly of California legislators pursuing high speed rail would make an assembly of Don Quixote’s appear as Winston Churchill’s. If only California would be lucky enough to elect some Dons...

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   06/16/11 15:40

GDP per capita in Greece is already only 2/3rds that in the US. And the share of GDP going to government consumption, and to consumption in the private sector, is no higher than in the US.

Greece gets a third of its GDP from trade and transportion, compared to a fifth in the US. Greece has traditionally made its living from the sea and from commerce, including small businessmen throughout the mediterrean, working as shopkeepers and small traders. Greece still has a large merchant shipping industry, with nearly 900 ocean going ships registered there, including nearly 300 oil tankers. It is not true that Greece can't earn its keep in the world, though the tendency of its recent profligate governments is certainly in that direction.

Greek imports exceed exports by 9% of GDP. Meaning, right now it sends promises of Euro payments it has no hopes of making abroad, in return for imports of real goods that it consumes. This does not reflect any shortfall in investment within Greece - investment there matches or exceeds that in the US as a portion of GDP. It reflects inadequate domestic savings financing that investment.

Basically, too much of the Greek population is consuming without producing, enabled in this by the government (and banks) borrowing abroad on their behalf and giving them things in return for votes. Since foreigners don't actually have any need for Greek votes, that game ends as soon as Greeks prove unwilling to pay real value to service their foreign debt.

There is nothing fundamentally wrong with Greece - its problems are entirely political and entirely self inflicted.

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   06/16/11 16:39

80/20 that magic ratio describes just about all human activity. 20% of the people pull the cart containing the 80% deadbeats.

Sadly those 80% deadbeats get to vote to make the 20% pay for their miserable lives. In America about 20% of the tax payers pay the bills for the other 80%.

How long will the 20% work hard to support the other 80% - that's the real question. The 20% are driven to succeed and will struggle to lug the deadbeats until the deadbeats insult them one too many times.

Those 20% can and do click a mouse and move vast sums of money out of America to countries that are not so hostile to them and don't bite the hand that feeds them.

Unfortunately America is just about at that breaking point - the 20% will simply move money, resources, and their time to countries where they are appreciated. As crazy as it sounds Hong Kong China is such a place.

In the mean time those 80% will want more and more and more - it's happened a zillion times in the past and will happen in the future again......

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