Obama-watchers here in the United States tell anyone who’ll listen that to understand our future, one has but to look at the shenanigans in Greece. Recently world stock markets include the ones here in the good ol’ U.S.A. tanked in response to the European Union/International Monetary Fund $150 Billion bailout of Greece. The three major fears concerning financial analysts are that either 1. the loan will NOT prove enough to cover Greece’s needs either for borrowing or the upward spiraling of debt or 2. the German parliament will not approve the bailout (voting is Friday May 6, in Germany) or 3. a combination of both scenarios. Just two and a half years ago Greece had a debt to gross domestic product ratio of roughly 55%, comparable to what the U.S. faced when President Obama took office (50%), but today Greece’s D/GDP ratio is at 102% and not only is the country facing financial ruin but there is literally “blood in the streets” as the all-powerful Greek labor unions are rioting in opposition to the belt-tightening being negotiated by the Greek government in order to receive the EU loans.
While Rajjpuut is NOT a fan of big and politically powerful labor unions, in the union’s favor it must be stated that the government of Greece has been guilty of outright lying and manipulating debt with “funny” statistics for about a decade now and the news that came out when the truth finally was released was more than shocking, it was abysmal. Oh, and for you Obama-watchers here, the D/GDP ratio in the United States has now risen to 76%.
To put things in perspective, and thus realize just how badly off the economies of Greece (also Spain, Italy, Ireland and Portugal) and the United States are, consider that the next worst of the European countries (England) had a ratio of only 11% w hen the following memorable speech linked immediately below was made to the EU by Daniel Hannan criticizing the actions of Prime Minister Gordon Brown a year ago. England’s ratio now is roughly 14% . . . .
https://www.youtube.com/watch?v=94lW6Y4tBXs
Many believe that Greece’s “contagion” will spread quickly to the other “PIGIES” (the next five weakest countries in Europe mentioned earlier, Greece is the "G") with one-time European financial bulwark Spain possibly the next to go. Spain about seven years ago had the strongest fiscal situation of any European power. Then they decided upon a critical experiment (one that Obama wants to work over here) and aimed to become the world’s #1 power in green technology. Spain’s 3% unemployment has spiraled all out of control and is now at 20%, second only to Greece’s problems. In the Spanish experience every green-tech job created cost $677,000 in government subsidies and killed 2.2 jobs in the real market place because of government spending and taxation. Most Spanish green jobs lasted from six weeks to nine months and only 1/10 of them proved permanent. In the United States that would translate to Obama’s promised “five million new green jobs” costing the loss of eleven more real economy jobs to subsidize them; and then with only 500,000 of those jobs proving permanent and a 22/1 ratio of lost real jobs to permanent green tech jobs. Additionally the typical green job pays $10-$14 per hour which is a huge letdown to most Americans’ way of thinking about new technologies.
The violence created in the streets by the Greek labor unions cost three bank employees their lives two days ago. The unions say they’ll refuse to make any financial concessions. Their intransigence might worsen the Greek debt situation or repel the other EU countries completely. As for Germany’s hesitation, the Germans suffered one of the two greatest inflations in European history (during the Weimar Republic after WWI, which eventually spawned Adolph Hitler and the Nazis) and the country is loathe to get involved with the fiscally irresponsible Greek government at risk of inflation to their own country. However, German Prime Minister Merkel has made it plain in her speeches that the “survival of the European Union is at stake.” Once again the European experience may prove to be a harbinger of things to come for the USA, because Fed Chairman Ben Bernanke has inflated our money by 1500% so that now there is 1600% more money in circulation in the country and today’s 2010 dollar is now potentially worth only about 6.3 cents compared to the 2008 buck. Of course in this country we're talking about fifty individual states in financial disarry not twenty-four separate countries.
Worse news for Greece, the violence and fiscal unrest don’t look like they’ll be ending anytime soon. If that ugly scenario keeps repeating the EU may not loan the money and Germany's refusal also could be in the cards. And the possibility of a worldwide depression is always on investors’ minds. Additionally, with the latest round of worries that the Greek debt contagion will spread to Spain and elsewhere in Europe. The looming specter of massive debt default and deflation is heavy in the air for investors worldwide and fear dominates the markets. All this and unending days of national strike are NOT painting an encouraging scene.
Ya’ll live long, strong and ornery.
Rajjpuut
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