Monday, 11 July 2011 17:19

Economy Of Downscales, U.S. Becomes The Next Greece Crises?

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US-GreeceThe United States faces a serious debt crisis and our leadership refuses to take the necessary action to solve the problem. To put it in the simplest terms…America cannot afford to spend more money than it brings in. No household could survive doing that.


America has been running deficits under every administration for generations. However, the situation has reached a crisis point lately. Under President Bush the yearly deficit had reached $500 billion. President Obama’s deficit it exploded to $1.85 TRILLION…over three times higher.


The underlying cause is a deep and continuing recession that reduces revenues along with massive deficit spending. $2 of every $10 spent in America comes from a government benefit…20% of our consumer economy is directly subsidized by government programs. This does not include government subsidies for corporations or foolish incentives like Ethanol.


Most of America’s middle class occupations have moved off-shore. That has hurt revenues. On top of that we have expenses associated with overly generous government retirement systems coupled with too generous programs for caring for the “poor” like: free cell phones, luxurious housing including exercise rooms and media centers, and a negative income tax to redistribute the wealth. All of these work to accelerate the problem.   Add to that the tremendous influx of illegal immigrants who take from the system in: jobs, expenditures for health care, schooling, and criminal costs while paying nothing in taxes and one can readily see where this nation is heading. (There is very little real poverty in America…just look around the world!)


No doubt some measures have to be adopted to correct the loop-holes in the tax system to raise revenues, but reducing spending should come first so that those who pay taxes know that their money will be spent reducing our debt and not funding more boondoggle ideas forwarded by Congress.


Americans need only look to Greece to see our own future if we fail to act. Greece has too many expensive social benefit programs for its population. But several additional problems have arisen that worked to unhinge their economy.


Presently 40% of the Greek GDP is in the public sector. Government expenditures are eclipsing the private sector. Revenues are falling because of the recession and the present deficit is now 15.4% of the national GDP. The nation has 12% unemployment and suffers from 4.5% inflation. The total public debt for Greece stands at 142% of the National GDP. As a result of these problems, the interest rate on Greek bonds to pay for debt is now 26.56%. A great investment if there was any hope they could pay it off…they cannot!!!


            Much of their problem stems from too generous social programs passed years ago including, but not limited to, a retirement age of 50 years old.   When the “baby-boom” population approached retirement age there simply was not enough money to cover promised benefits.


            But Greece had an additional problem. That nation has been overrun by illegal immigrants who have descended on the nation and are demanding the social benefits Greek citizens invested in years ago. As the mayor Athens stated: “Athens has become the new Beirut!” Of a population of 10 million nearly 1 million are illegal immigrants…10%!


Immigrants from Albania make up 57.5% of immigrants with others coming from the former Soviet Union, Bulgaria, Pakistan, India, Romania, and now Africa and Asia.


            Initially these people took on the jobs that nationals would not take. This was especially the case during the boom years of preparation for the Olympics.   However, once that boom ended and the recession set in, competition from low paid illegal labor rendered Greek nationals unemployable. Furthermore, despite the fact that they work…they pay no taxes into the system.


            As the recession deepened and political problems in the region exploded, immigration increased as well. Although active attempts have been taken to control its borders, Greece still faces a great influx of illegal immigrants who are crowding into the urban centers and squatting in abandoned buildings.


            From a social perspective these people have no jobs and live in squalor, but make continual demands on the education, healthcare, and criminal justice system. They account for 42% of homicides, 43% of sex crimes, and over 30% of robberies and burglaries. Medical costs for illegals amount to $1 billion Euros per year, not counting emergency services.


            Taken all of this together Greece faces a real crisis. It can neither pay its bills nor finance its debts. The nation faces default as a result. To sustain its economic viability it must make draconian cuts in social programs while increasing taxes. The first creates hardships while latter merely serves to drive what little business activity exists either into bankruptcy or off-shore. So the situation worsens.


            Result: riots in the streets! Despite the fact that the situation has somewhat cooled since the austerity package passed parliament this month, anger persists.   What is worse, a new wave of anti-immigrant violence is arising which some expect to explode by September or October.


            The bottom line is that Greece is the canary in the mine.   What happens in Greece will arrive on our shores within a short time simply because we have patterned our social programs along European lines. America also faces real problems with illegal immigrations, reduced manufacturing, and expanded social spending.


            America can no longer “kick the can down the road”.   Real solutions have to be made to solve real problems.   The deficit has to be cut, social programs have to be cut, our military has to be brought home, and the tax system has to be cleaned up.   Everyone must pay something, today nearly 45% pay nothing and too many even receive “refund checks” who have paid no taxes. By simplifying the tax code, revenues can increase while cutting hidden tax shelters for special groups… for instance, hedge fund managers like George Soros and his ilk.


            The media has missed the boat. They speak of the Tea Party with derision while they praise the Arab Spring. However, the Arab Spring began in America with the Tea Party.   The Tea Party is no more organized than the demonstrators in Cairo. Both represent an explosion of popular anger over the present problems of: excessive deficits, rampant corruption, tax evasion, inside deals, bloated bureaucracies, high unemployment, lack of opportunity, and illegal immigration.


            The people of Greece and America want the same things…answers not political posturing or partisan bickering. America will end up like Greece unless we have real leadership with the strength to face the problems instead of prostituting themselves to their respective constituencies while continuing the policies that have derailed our national stature.

       by Ron Chapman


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