Now you might say, hold up here friend, I haven’t invested any money in Greece, how could I lose any? That is a good question, but the short answer is you most certainly can. The reason is because the current situation in Greece and its ongoing history of financial turmoil is affecting the international currency markets. The ripples from Greece flow throughout Europe and into the international monetary community. Investors react negatively by selling off products, thus reducing their value and in turn undermining investments. Faith in the financial markets is thus shaken with more investors rapidly scurrying for shelter.
Sadly, the situation in Greece is no accident and no surprise. Greece has been in a state of continuous financial trouble since around 600 B.C. After Greece became an independent nation in 1821, its financial woes only increased in frequency and dollar amount. By the mid-1800’s, the debt losses incurred on loans for Greece ran into the millions of dollars—a healthy sum of money at the time. In fact, the Greeks are credited with inventing the collateralized loan, i.e., putting liens on physical assets to cover the loan value should the borrower default. Today Greece seeks bailout after bailout from anyone who will listen, but, ultimately, they never change their ways and the result is maddeningly the same—default. Greece is illustrative of Einstein’s definition of insanity—doing the same thing over and over again but expecting different results.
Greece’s situation is complex but it seems to me there are two major factors that contribute to its long history of poor financial management: first, a large and consistently corrupt central government, and second, Greece has been for years steeped in the waters of socialism. Now, we can blame the politicians but we also have to blame the people who steadily look to the government to provide them their daily means. Despite the austerity guidelines on which prior bailouts have been predicated, and which some administrations have tried to address, the end is the same—when the loans come due, there is no money to pay them.
There is another fly in the ointment in Greece and that is the economy. Greece is not a manufacturing nation, and it never has been. Its Gross Domestic Product comes primarily from the shipping, tourism, and service industries. Job creation has stagnated and unemployment numbers are among the highest in Europe. In recent years, unemployment for the younger generations has run as high as 60%. Greece has been gripped by a recession for the past six years with the government exercising more control over the revenue generators of the economy than the private sector—a recipe for disaster in any country. In effect, the central government has taught its citizens to look to it for everything from jobs, to pensions, to medical care. Understand, the government cannot generate the revenue to pay for those things, but the politicians continue to promise the moon and stars and ask other nations to finance their socialist policies. Currently, Greece’s debt burden is an astounding 170% of its GDP and there is no viable solution on the horizon.
The irony in all of this is that the socialist ideology which seems to permeate much of Europe is the very reason the European Union is being asked to bail out Greece just one more time. Once more, the producing countries are being asked to pony up and carry the non-producing country—Greece. This is typical of the socialist society in which the producers pay the way for the non-producers until the entire thing collapses. At the moment, Greece is the epicenter of a large financial whirlpool that could easily suck down many other European countries if they continue to put money into loans that will only end up in default. You can’t blame Greece. Like Pavlov’s dogs, they’ve learned that each time they go to the well, they will come away with more loans as a reward for their past behavior.
Greece is a parliamentary republic, meaning the people get to vote for the members of the Parliament and that body in turn puts in place the administration of the new government. So, Greek voters do have a say in how they are governed. Nevertheless, that has done little to stop the corruption, and apparently the voters like the freebies that the successive governments have continued to dole out. There is an old adage that people get the leaders they deserve. If they tolerate dictatorship—they will get it. If they long for a large, over-controlling central government, they will get it. In the case of Greece, it appears that the majority of people have been willing to trade their own comforts and security for whatever happens. Now austerity measures will take away some of their comfort and security and there is little they can do about it—they have traded their sovereignty for worthless beads.
The story of Greece is a cautionary tale that all Americans need to heed. Today we, too, are walking the edge of an abyss called socialism. By becoming a nation that is more and more socialized with each passing year, we have put the federal government at the center and in control of our lives and our destiny. Our economy, our individual success, and our rights are being given to a bunch of political bead traders. No amount of bailouts will save Greece from its continuing reckless financial behavior and the same is true for the USA. Eventually, the people are the ones who pay—first with their money, then their freedom, and finally their dignity. Wake up America. Greece has a message for us all.
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