Monday, March 8, 2010

the tragedy is only Greek for now: somebody has to pay for government spending

From Tim Lamer in World...

The problem with out-of-control government spending is that, at some point, somebody has to pay for it. Governments tend to ignore that fact, but Greece, over the last few weeks, provided a reminder that it cannot be ignored forever....Nobody wants to pay, but somebody must.

The crisis was brought on by a swelling Greek budget deficit and national debt, which have grown to almost 13% and 113% of GDP, respectively....

The Greek government responded by freezing the wages of government workers, raising the Greek retirement age from 61 to 63, and raising some taxes. Thousands of Greek government workers, union workers, and pensioners—the biggest beneficiaries of high levels of government spending—in late February took to the streets to protest the moves....

...the next big date to watch for is March 16. That's the deadline EU finance ministers have given for Greece to show progress in bringing its budget under control. If Greece doesn't do so, then the EU may dictate specific reforms.

The really bad news in all of this is that Japan, the United States, and the rest of Europe—all with low fertility rates and big government debts—will soon face their own versions of this Greek tragedy. And somebody will have to pay.


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