published Thursday, November 3rd, 2011

Greece (and everyone) on the edge

Buckling under the weight of massive debt created by uncontrolled government spending, the nation of Greece is on the edge of a financial abyss that threatens worldwide consequences.

The failure of a first bailout of Greece by other European nations has led those countries to offer a second bailout. But this one comes with requirements for big new austerity measures -- on top of the first bailout's huge tax hikes, spending cuts and reductions in pay and pensions.

Outraged that their government can no longer spend money it doesn't have, Greeks have taken to the streets. Demonstrations against the austerity plan from the original bailout have degenerated into rioting and violence.

Now, the chaos may deepen as the Greeks prepare to vote in a referendum on whether to accept the second bailout and all its painful requirements. If the referendum fails, Greece likely faces outright default on its loans and withdrawal from the eurozone -- the group of 17 nations that have the euro as their common currency.

Financial markets around the world -- including in the United States -- plunged on the news that Greece would hold a referendum on whether to accept the latest bailout. (There are indications that it may vote no.)

The fear is that Greece's financial collapse could trigger a new global recession -- in a world where many nations are already in an economic crisis. That has prompted calls for Greece's government simply to accept the bailout without holding a public referendum at all.

Meanwhile, on this side of the Atlantic, we're not quite so far along the path to disaster as Greece is. Yet Congress is playing games on the issue of reducing our own potentially catastrophic $14.9 trillion debt. Proposed spending cuts are too small, and they are coupled with dangerous tax hike proposals and plans for even more wasteful government spending.

Must we follow Greece's example and be brought to the point of ruin before we will reverse course?

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conservative said...

"Outraged that their government can no longer spend money it doesn't have, Greeks have taken to the streets. Demonstrations against the austerity plan from the original bailout have degenerated into rioting and violence." Outraged that their government can no longer spend money it doesn't have, the riffraff, lieberals and socialists in America have taken to the streets.OWS demonstrations against any austerity plan have degenerated into rioting and violence.

November 3, 2011 at 9:17 a.m.
holdout said...

The Greeks are well on their way to being kicked out of the European Union and to reverting to a third world country of impoverished peons.

November 3, 2011 at 10:28 a.m.
nucanuck said...

No, holdout, the Greeks may eventually drop out of the EU, but they won't be kicked out because that would make the Greek debt an instant write-off. That would make the big European banks' insolvency unhideable...and crash the Western financial system. That will be resisted at all costs until a black swan takes it all down suddenly and uncontrolably. When the European banks go down, the US and others will go down as well...you can count on it.

November 3, 2011 at 2:04 p.m.
acerigger said...

cunservative, all of the "rioting and violence" has been by the police, not the OWS protestors! Sounds like you need to fact=check your main source of info,Bill O'Really.

November 3, 2011 at 2:35 p.m.
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