Free Markets, Free People

unsustainable


How “unsustainable” does it have to get?

If you’re wondering what “unsustainable” looks like, here’s a great example.

In the wake of the Treasury Department’s newly released summary of federal spending for 2012, it’s now possible to detail just how profligate the Obama years have been. Here’s the upshot: Under Obama, for every $7 we’ve had, we’ve spent nearly $11 (or, to be more exact, $10.95). That’s like a family that makes $70,000 a year — and is already knee-deep in debt — blowing nearly $110,000 a year.

If you are further wondering why Democrats are so keen on raising taxes, this helps explain that.

In other unsustainable news:

The government spent approximately $1.03 trillion on 83 means-tested federal welfare programs in fiscal year 2011 alone — a price tag that makes welfare that year the government’s largest expenditure, according to new data released by the Republican side of the Senate Budget Committee.

The total sum taxpayers spent on federal welfare programs was derived from a new Congressional Research Service (CRS) report on federal welfare spending — which topped out at $745.84 billion for fiscal year 2011 — combined with an analysis from the Republican Senate Budget Committee staff of state spending on federal welfare programs (based on “The Oxford Handbook of State and Local Government Finance”), which reached $282.7 billion in fiscal year 2011.

Business as usual.

Oh, and the jobless numbers look lovely this week too.

~McQ


Greece goes cold turkey

And no, that’s not a joke about Turkey.  What you’re seeing in Greece is what you see in any drug rehab program … the results of withdrawal.  In this case, the addiction isn’t to heroin or cocaine, but other people’s money.  And Greece passed the tipping point of dependency years ago, decades ago.

But the money has finally run out and the addict doesn’t have the necessary money for the next fix.

Result?  Violence, denial and the refusal to accept the treatment.

More than 40 buildings were set ablaze in an orgy of looting that left scores injured as protesters vented their anger at the caretaker government and parliament’s ordering of a further €3.3bn of savings by slashing wages and pensions and laying off public sector workers.

[…]

But the scenes of mayhem on the streets of Athens and all across the country leave big questions unresolved regarding Greece’s capacity to stick with the savage austerity. The country is in its fifth year of recession and has little prospect of halting a steep decline in living standards.

[…]

Meanwhile street battles between police firing rounds of teargas and demonstrators hurling firebombs and marble slabs left Syntagma square, the plaza in front of the parliament building, resembling a war zone.

Rubbish bins burned and plumes of smoke and asphyxiating clouds of toxic chemicals filled the air.

The explosions were so loud, they could be heard inside parliament and the teargas drifting across square reached the debating chamber. The buildings that were set on fire included cinemas, banks and a number of shops, and Greek television reported that dozens of citizens and at least 40 police officers had been injured.

Why?  Because the caretaker parliament has, of necessity, tried to do what is necessary to return the country of Greece to fiscal sanity.  And that entails drastically reducing or eliminating decades of entitlements that the government granted but which was obvious the country couldn’t afford.   Among them:

Parliament backed drastic cuts in wages, pensions and jobs on Sunday as the price of a 130-billion-euro ($172 billion) bailout by the European Union and International Monetary Fund …

That included a roll back of Greece’s minimum wage.   This doesn’t settle anything though.  Although the vote was important, EU leaders are still not convinced that implementation will ever happen:

The EU welcomed the vote, but told Greece it had more to do to secure the funds and avoid a disorderly default next month that would have "devastating consequences."

Euro zone finance ministers meet on Wednesday, and the fragile ruling coalition of Prime Minister Lucas Papademos has until then to say how 325 million euros of the 3.3 billion euros in budget savings will be achieved.

A government spokesman said political leaders also had until Wednesday to give a written commitment that they will implement the terms of the deal, reflecting fatigue in Brussels over what EU leaders say have been a string of broken promises.

So this has turned into a series of attempts and votes and “guarantees” and failures leading to this latest attempt to keep Greece afloat – something the rest of Europe, according to reports, deems as critical.

There’s also a vote in April, a month after the demand that the deal agreed upon is scheduled to be implemented.  Many observers believe the vote will be driven to the extreme left or right by these events.  That, of course, would set up political polarization which will be difficult, if not impossible, to overcome.  A preview of that problem was seen after this vote:

The leaders of two of the three major political parties in Prime Minister Lucas Papademos’s interim coalition government — the Socialists and the center-right New Democracy party — agreed on the new round of austerity after days of tense debate, maneuvering and threats. The leader of the third, the right-wing Popular Orthodox Rally, refused to endorse the measures and later withdrew from the coalition.

In the debate on Sunday night before the vote, Mr. Papademos appealed to lawmakers to do their “patriotic duty” and pass the measures, saying they would be saving Greece from bankruptcy in March, when a bond issue comes due that Greece cannot repay without foreign help.

In a sign of how the crisis has frayed the political order in Greece, the three leading political parties all moved swiftly to expel lawmakers who had broken ranks with leaders in the voting.

Although we’re likely to deny any applicability of the crisis there to our circumstances, our country is headed in the same direction, albeit later and more slowly.  But the end-state will be the same.  The difference is just a matter of degree, not design.  Greece is simply the first of many countries who’ve tried to redistribute income to support a socialist inspired lifestyle from a diminishing pool of workers. 

It is our future, if we don’t change our ways … drastically.

~McQ

Twitter: @McQandO

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