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Krugman Plays the Fiddle While Athens Burns

Updated on May 16, 2012
Greek Party Rally
Greek Party Rally | Source

Europeans were supposed to set an example for the rest of the world, especially us Americans, that austerity works. Well, they’ve screwed it all up. Austerity, cuts to wages, jobs, pensions, health care, education, higher taxes and so forth, hasn’t worked economically because Greeks haven’t found a way to make silk out of a sow’s ear. Besides, the European Union (EU) has cut back on Greek’s supply of sow ears.

Austerity hasn’t even worked political. The Greeks, after two years of austerity, can’t even form a government. The two parties that received the most votes in recent parliamentary elections are against austerity. The Greek people have voted against Germany and the wealthy coalition of international Bundesbankers. The election results left Greece without a clear majority party, and now they can't form a coalition government. It also means the world is doomed to the dark ages for another hundred years. It will be a Greek tragedy for all of us.

Leaders of Europe's largest economy, Germany, need to make it clear to Greece what is at stake. If German Chancellor Angela Merkel blitzed into Greece and demanded that they march to Germany’s Tin Drum, the heirs of Plato might obey. Jens Weidmann, head of Germany’s central bank, warned Greece about the dire consequences of not doing what they are told. “Asked about a possible Greek exit from the 17-nation euro, Weidmann said that "the consequences for Greece would be more serious than for the rest of the Eurozone."” However, it appears that Weidmann and Merkel’s extortion tactics aren’t working.

But never fear dear patriots. Many banks that lent to Greece are protected from losses. These banks loaned money to Greece but also invested in derivatives, a bet against Greek solvency. Therefore, some companies will profit if Greece goes into default. Moreover, some banks were helping Greece hide its debt so they could exceed EU debt limits of 3% of yearly GDP and 60% of GDP in total debt. “Further, while Goldman Sachs was helping Greece hide its debt from the official statistics, it was also hedging its bets through buying insurance on Greek debt as well as using other derivatives trades to protect itself against a potential Greek default on its debt.” Even Mitt Romney was wise enough to bet against Greek debt so he could make a profit off their misery. Mitt is good at profiting off of the tragedy of others, so he gets my vote.

I can see Rachel Maddow and Amy Goodman jumping out of their seats ready to pounce on our free enterprise system. These capitalism hating liberals and their comrades will tell us that perhaps those that helped Greece create and hide their debt should face penalties for their actions. That would be as unpatriotic as asking banks that propped up the housing market with second mortgages and credit default swaps to pay for their part in the foreclosure crisis.

In an ironic twist, Greece, one of the ancient world’s leading centers of education, has had to slash its education budget. “Already this school year, the government has had trouble supplying textbooks to its students, and many schools are struggling to afford keeping the heat on throughout the day. Schools also haven't been able to invest in new technologies, "an area where Greece was already lagging behind most European countries.""

The cuts to education are going to create character in the Greek people. Living a spartan life will make them strong, like Spartans. And really, any child that can learn without books, heat and computers must be really smart. Austerity in Greece will help weed out the dumb kids and let the smart kids shine through like a silver spoon in a garbage heap.

Republican Governor of Indiana Mitch Daniels has warned us that we will soon be in the same position as Greece and Spain if we don’t start slashing programs that help the less deserving amongst us, like the Greeks are in Europe. Paul Krugman responded in his smarmy, “I have a Nobel Prize in economics” way, “By the way, apparently nobody told him (Daniels) that Spain had low government debt and a budget surplus on the eve of the crisis; it’s in trouble thanks to private-sector, not public-sector, excess.” Again Krugman blames Spain’s debt on what corporations did to encourage the debt crisis.

Then Mr. Nobel Prize points out that, “…Ireland, which has done everything the austerity crowd wanted, is in terrible shape too, with unemployment near 15 percent and real G.D.P. down by double digits.” The heathen doesn’t even realize that in the Catholic dominated countries like Greece, Spain and Ireland, the people must suffer, atone, and then perhaps things will work out for the better. The church, i.e. the lending institutions, have to get their cash first, and only after a few years of tithing to the banks will these nations have the chance at economic salvation.

Krugman just doesn’t understand this. “You have to wonder how countries that are systematically denying a future to their young people — youth unemployment in Ireland, which used to be lower than in the United States, is now almost 30 percent, while it’s near 50 percent in Greece — are supposed to achieve enough growth to service their debt.” Doctor Krugman misses the point of austerity entirely. Austerity is a kind of modern day self flagellation. These Catholic nations will not feel better until they have flagellated themselves for a few years with austerity. And the United States must atone too.

That’s why we must cut Social Security, Medicare, education, school lunch programs and all the social programs that people paid into for years. We must cut the spending to the bone, kill it and bury it before our economy can come back to life once more. Suffering is progress, progress is growth, and growth means more factories in China making iproducts. Why does Krugman fight suffering with economics and logic! Damn liberal!

Peace,
Tex Shelters

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    • texshelters profile image
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      texshelters 5 years ago from Mesa, Arizona

      Chris,

      Please disagree. This is a free speech zone, after all.

      Some cuts are fine, but not when they reduce present and future productivity.

      PTxS

    • CHRIS57 profile image

      CHRIS57 5 years ago from Northern Germany

      texshelters, please allow me to disagree. The austerity program for Greece is nothing else but introducing some basic rules of efficiency.

      Certainly that cuts jobs and imposes hardship on many Greek citizens. Looking at it from a macroeconomic level, there is no productivity in the economy that could be shared in whatever form of benefits, employment, high wages among its participants.

      Whatever the name of the program is, it is nothing else but adaption to reality. Mr. K. may think, reality is nothing important to look for, but in the end only real stuff, real economy will win and not pseudo bubble growth .

    • texshelters profile image
      Author

      texshelters 5 years ago from Mesa, Arizona

      You know that I meant the austerity program forced on Greece didn't work, right? And that cutting jobs when revenues are low and unemployment is high is NOT a solution.

      Read the links.

      Krugman, among others, demonstrates that austerity EU style isn't working.

      Peace,

      Tex Shelters

    • CHRIS57 profile image

      CHRIS57 5 years ago from Northern Germany

      Who says austerity doesn´t work?

      It does work. If you define austerity to live well within your means, it works. If you define austerity to look for a balanced revenue and spending situation, it works. If you define austerity to carefully observe benefit leverage of spending, it works. If you allow enough taxes to be raised to create revenues, it works. If you have a government that follows the same efficiency laws as private corporations do, it works.

      It does not work, if debt is already towering above 90% plus of GDP. It does not work if the administration is not smart and efficient enough to balance the budget. It does not work if taxes are understood to be evil, leading to tax evasion or tax reduction laws.

      So Greece is in trouble and austerity won´t help much, because of too much debt and too much tax evasion and too little efficiency in government.

      The US is likely to join the pack, because of too much debt, too little trust in administration and too low tax rates. Of course the US is an economic giant and not a dwarf like Greece, but shows similar symptoms.

    • texshelters profile image
      Author

      texshelters 5 years ago from Mesa, Arizona

      Curiad,

      Nope. Never!

      PTxS

    • Curiad profile image

      Mark G Weller 5 years ago from Lake Charles, LA.

      It almost sounds like the big money people set this all up just so they could bet against it....

      No, they would never do that!