Greece Needs to Pay Off Debts While It Still Has a Chance

Fox News ^ | June 22, 2011 | John R. Lott Jr.

[JohnRLott]

Tuesday night the Greek government survived a no confidence vote, with relative ease, thus allowing the Greek government to go forward negotiating a new bailout. The government faces a vote over "new austerity" measures, but there is no more reason to believe that Greece will keep its promises to sell assets and cut spending this time than it has over the past year.

Last year's mammoth €110 billion ($157 billion) European Union and International Monetary Fund bailout was supposed to cover Greece's financial problems for three years. But just one year later Greece is seeking another €100 billion.

The G-7 countries and major banks met well into Monday morning but failed to reach an agreement on any more than a temporary bridge loan.

Despite Greece's promises, government spending is up over last year's already bloated levels, the deficit is bigger than ever, and it has utterly failed to meet the promised sell-off of some government assets. Not a single public bureaucrat has been laid off so far. . . .

[hans56]

“According to Alan Greenspan, former Federal Reserve chairman, such a default has the “potential to push the U.S. into another recession,” as the problems for European banks would spill over to American banks.”

What the hell does he mean, another recession?

[ClearCase_guy]

Bernie Madoff needs to pay off his debts while he still has a chance.

[lurk]

Greece is the alcoholic asking for (cough, cough) help with his rent payment.

[Buckeye McFrog]

the country will be literally on fire before the first payment goes out the door

[The Great RJ]

Greece's problems won't go away even if somehow they manage to stave off default on their debt. Decades of socialism and high taxation have crippled the Greek economy. Public employment accounts for 40% of the Greek GDP and the public sector does not grow the GDP as it produces no goods or services sold in a market, does not create new businesses or new jobs and lives off the taxation of those who do produce in the economy. Adding to the problem is that these public sector jobs have lavish benefits and high salaries due to the success of the public employee unions wielding their political power.

It is little wonder why a true trimming of the public sector budget has such opposition as it would mean that highly paid bureaucrats and government functionaries would have to either lose their jobs or take huge pay cuts. Greece will try to tax their way out of their debt crisis and only make things worse as private sector jobs and investment capital will flee the country.

[fortheDeclaration]

Greece isn’t going to pay!

[RFEngineer]

“Greece isn’t going to pay!”

Nor is it in their best interest to pay. If their government is looking after it’s citizens, they should default, then use whatever capital they can gather to rebuild whatever they can afford on a pay-as-you-go basis.

[fortheDeclaration]

I agree. Default is the only way to stop the Banks from lending money to poor credit risks.

[rhema]