Dear Friends,
In looking over the various stories circulating around the internet concerning the woes of Greece, I am struck by what seems to be a common theme – the evil, nasty bankers and crony politicians are all to blame while the hapless, innocent citizens of Greece have to suffer as a result of their nefarious plotting.
Let me first say that I am no fan of the money changers ( I view them in the same light as Thomas Jefferson and most of the Founding Fathers did); however, the constant haranguing of the banks and politicians fails to address the root cause of Greece’s problems or for that matter, much of Europe’s, which has now exploded into a full blown sovereign debt crisis.
Politicians gave the people what they clamored for and did so being unable to pay for it. In other words, the citizens demanded a handout from the public dole and they got it from craven politicians who were more than happy to accommodate them by deficit spending. They could not raise taxes to pay for the public feeding trough because that would be politically unpopular (not to mention punishing the few productive enterprises that are being milked to sustain the entire system). The banks of course bought the debt that the government issued never thinking that at some point the debt would have to be repaid by the government, which had dug itself deeper and deeper into the hole.
Of course once the quality of the debt became suspect, these same banks that loaded their portfolios full of the stuff go crying, screaming and begging to the monetary officials to save them from their own stupidity.
That is when the vicious cycle commences in earnest. Outcome the printing presses, quantitatively easing ramps up to warp speed and down comes the value of the currency.
This is what happens when the statist model comes to fruition – the economy begins to slowly wither and die as government consumes an ever-increasing share of the nation’s economic output becoming a bloated beast in the process. Witness the rioting in Greece and understand how much political courage it takes to get a country’s financial house in order. Spending has to be brought under control and government needs to be reduced in size which means bucking the headwinds from a vociferous citizenry which has succumbed to an entitlement mentality.
Why mention this now? Simple – America is headed down the same path as we do the same thing that the Western nations have all been conditioned to do in times of economic crisis – issue even more debt and flood the system with liquidity. Promise government funding for all manner of things such as home buying credits, auto credits, cash for caulkers, cash for golf carts, etc, ignoring the train wreck that is coming our way in the form of entitlements such as Social Security and Medicare. At its current trajectory, US total debt as a percentage of GDP will soon be at levels that have always engendered a currency crisis elsewhere throughout the rest of the world. It then becomes almost inevitable that the giant hedge funds turn their guns on the US Dollar and the US debt market. Once that occurs, the current monetary system as we know it comes to an end. That is when gold will be reintroduced into a new and different monetary system.
Personally, I would hope that it would not come to this but judging from what I now see, unless the US can get its fiscal house in order within the next two years, I think we will reach a point of no return. We may well already be there with the only option left to us being a devaluation of the Dollar since a default on the debt would be catastrophic with consequences too horrific to contemplate. This is the reason you own gold – to protect yourself against such things.
Please read the following article and ask yourself who is being reasonable here and who is not.
In Greece, sacred perks on the line
By Star-Ledger Wire Services
May 19, 2010, 6:45AM
A street artist joins a protest during a strike by municipal workers in Athens earlier this month. The Greek system of allowing early retirement for some workers has drawn the wrath of other European Union members.In Greece, trombone players and pastry chefs get to retire as early as 50 on grounds their work causes them late career breathing problems. Hairdressers enjoy the same perk, thanks to the dyes and other chemicals they rub into people’s scalps.
Then there are masseurs at steam baths: they get an early out because prolonged exposure to all that heat and steam is deemed unhealthy.
Until the Greek debt crisis, northern Europeans looked at Greek early retirement with an amused roll of the eyes.
But more and more such loopholes are angering them: they bristle at being asked to pay for their laggard southern neighbors’ early retirement.
When Germany’s top-selling newspaper Bild asked readers in that fiscally prudent nation how they felt about coughing up hard-earned money for this kind of luxury, the daily’s website lit up with comment.
In a bloc with a shared currency but with no power to enforce budgetary restraint and keep members from spending themselves into messes like Greece’s, the retirement quirk illustrates yet another fault line that crept to the surface with the debt crisis that began in Athens and is threatening to spread across the euro zone.
