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Archive for the ‘Greece’ Category

Greek Default

What’s happening to Greece is a glimpse of America’s future: years of artificial plenty followed, quite dramatically, by unrest, massive cutbacks in services, and a loss of power and prestige.  This, all due to excessive government spending and a lack of economic productivity.  To a lesser extent, it’s also the story of how foreign institutions, international bankers, and foreign governments will control a people’s destiny if those people are too indebted to them.

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One feature of EU bailout discussions is frustration and annoyance by net contributors to the EU-such as Germany and France–at the prospect of financing unproductive, corruption-ridden, and an overly generous Greek government that created debts that these net contributors may now be on the hook for.  America is not so different.  Some states are wildly productive and net contributors to the federal government, not least Texas and the small government states of the Mountain West.  On the other hand, California among others has long had a generous welfare state, relatively low taxes, and has made itself hospitable to large numbers of low productivity, low education illegal aliens.  The feds, of course, bear some responsibility for this, but do North Dakotans? Alaskans? People from Connecticut?  Do they feel kinship with the polyglot population of Los Angeles and the anti-American leftists of San Francisco?

State governments, particularly California, are going broke, and the stimulus has functioned in part to shift their debt and recurring expenses from state rolls to the fed’s.  But, just as with Greece, bad decisions yield bad state finances.  Will California drag down the rest of the country with its real estate speculating mania and big government ways?  And how will the rest of America feel about propping up UC Berkeley, the LA schools, and the subsidized farmers of the Central Valley?

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