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Greece

There is so much to talk about right now, first Greece then America.  In between stories about a couple of dead birds found with oil on them in the Gulf and every possible detail and public statement regarding the incompetent Times Square terrorist, you may have noticed that Europe is burning.  Well Greece is anyway and the rest of Europe is situated comfortably in a big pot over the fire.  So how did it come to this?

If someone asked you two years ago what type of economic system Greece had, would you have said “socialist?”  If not you would have been incorrect.  But the difficulty with questions like this is that socialism doesn’t happen with a revolution or a new constitution, it just kind of happens.  Every time you “create a right for the people” you slide a little more into socialism.  This is because the things you are creating are not rights.  Rights are given by God.  Government only creates claims on someone else.  They can’t change the laws of nature so that healthcare is created at no cost, they can only allow you to demand that someone else pay for your healthcare and back up that demand with force.  They cannot change the laws of nature so that after age 53, you no longer require resources to stay alive.  All they can do is give you a claim on the resources of others and back up the claim with force. 

So Greece has been steadily descending into this quagmire of cradle-to-grave entitlement for years, to the point where the people feel they are entitled to work half their life (probably for the government) and then live at the public’s expense for the other half just because a politician told them they could.  But guess what, when you rely on the government for your survival, your standard of living is dependent on what the government is able to provide.  The government can only provide in two ways.  It can take from people who are productive or it can borrow from people who are productive under the promise that it will pay them back with funds taken from future productive people.  The problem with the first is that the more you leech off of the productive portion of society, the more you diminish the incentive to produce and therefore the more you reduce the pool of wealth subject to your looting.  The problem with the second is that lenders can anticipate the first problem and won’t lend to you once they realize that you don’t have a better plan to pay them back. 

Some time ago, Greece’s ability to loot enough from the productive sector of society to pay for the entitlements it had promised to the dependent portion ran out.  But this was not a crisis because they still had the ability to borrow.  So they just kept spending and borrowing and people (actually banks mainly) kept lending to them because they weren’t so far in debt that it seemed impossible for them to ever pay it back.  This in spite of the fact that they were borrowing to pay for programs that were completely unnecessary and there was no reason to believe that they would ever turn back from their socialist ways and start spending less than they were taking in, in order to pay these loans back. 

So now Greece has debt of about 120% of GDP and all of a sudden lenders are starting to wonder if they really intend to pay it back.  And the solution?  Just lend them some more money of course.  But that’s not that crazy since they’re demanding that Greece adopt a new austerity package so that it can get back on the path of fiscal responsibility and eventually pay off its debt right?  Wrong, according to officials of “all stripes,”

Greece’s tough austerity package of budget cuts and tax hikes will convince financial markets, by late next year, that Greece is a good enough credit risk to begin lending again before the €110 billion runs out.

So basically, in return for this giant loan from Europe and the IMF, they are promising to change just enough so that they can borrow more from someone else next year.  To make matters even more hysterical (I mean that in both the amusing sense and the mentally defunct sense), as indicated in the WSJ article,  the very measures that would move Greece in the direction of being able to pay off its debt would also put them in the ideal position to default.  You see, the only reason not to default on a debt is that it will make other countries refuse to borrow from you.  Well if Greece were ever able to run surpluses, it wouldn’t need to borrow and then it could easily default on all its debt.  Talk about moral hazard

Now, put yourself in the situation of Greece.  You have been spending more than you make for some time.  Finally your creditors are cutting you off.  The only way to keep alive is to either produce more or spend less (or probably both).  You would need to have a come-to-Jesus moment.  You would need to realize that the way you were living could no longer work.  You would have to correct your behavior to be more in line with reality.  You would have to learn to obey certain laws of nature that you had been ignoring, like for instance, that you cannot indefinitely consume more than you produce.  The last thing you should do in this situation is take a vacation.  Sorry, make that the second last.  The last thing you should do is take a vacation down to where you work and torch the place. 

What has been Greece’s reaction?  Realize that they have to tighten their belt and live on less?  Not exactly.  Decide that they will have to work harder and be more productive to maintain their standard of living?  Wrong again.  They go on strike of course.  They not only stop producing at all but they actually engage in destruction.  They are purposely trying to defeat the attempts by the rest of the world to save their ass.  What could be possessing them to do this?  The way I see it, it is the confluence of two effects.

First, this is what years of soft socialism do to people.  When your government has been granting you “rights” all your life, you learn to believe that your rights, your sustenance, your very existence comes from government not from your ability.  In a rational system, the satisfaction of your desires is linked to your ability to use reason in conjunction with the laws of nature to produce the objects of your desire.  Socialism drives a wedge between your desires and natural law.  It teaches that the way to get things is to demand them from government.  Government becomes a substitute for God.  One that is more easily petitioned by prayer.  The laws of politics become a substitute for the laws of nature.  Money becomes manna from heaven.  When your allocation of manna gets reduced, the only solution you can think of is to demand harder.  They say things like this, believing there must always be someone else to loot for the simple reason that there always has been before.  Their form of prayer is the strike, the protest, the demonstration.  But they don’t realize that the entity they are praying to is still bound by the laws of nature that they have learned to ignore and it is only capable of cheating them for so long.

This problem would be serious enough by itself, but when you throw in a few of these people acting in thoughtful ways behind the scene you have the recipe for a real disaster.  See, communists don’t want Greece’s government to survive this crisis.  They actually understand the laws of nature and they know that Greece is on the verge of collapse.  They have been waiting for this moment.  They know that if they can just push it another inch over the edge, they will be in a position to “fundamentally transform” it into their vision of a communist paradise.  This may seem like a conspiracy theory but it’s exactly the blueprint layed out by Marx.  The evolution of government goes capitalism-socialism-communism.  Also, notice that they aren’t calling on just Greece to “rise up” they are calling on Europe.  They know that the rest of Europe is tied up in this, that they have all been walking the same socialist path, and that the reason they are so willing to bail out Greece is that there is a real danger of Greece dragging the whole continent down with it.  Germany, that pillar of prudence and responsibility in Europe, currently has a debt of 21,000 euros per citizen.  The whole continent is deeply in debt, they can’t all bail each other out forever.

So the bottom line: Greece is really screwed, and the rest of Europe is, well… really screwed.  But what does this mean for us?  That story coming up.

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