Greece: The Revenge Of The Debtors

With Greece, We're Watching The Revenge Of The Debtors

07/06/2015  

Socialism: Indebted nations of the world are applauding the "Oxi" vote against "austerity" in Greece not so much as a victory for the common man, but because they have plans to default on the billions they owe. Brace yourself.

Socialism: Indebted nations of the world are applauding the "Oxi" vote against "austerity" in Greece because they no doubt have plans to default on the billions (BEG ITAL)they(END ITAL) owe. Brace yourself.

What we're witnessing is the revenge of the debtors — socialist nations that believe they're striking a blow for human rights by not paying what they owe unless creditors give them the terms they demand.

Investors around the world have long worried that a default on Greek debt would bring about a bankruptcy contagion that would spread throughout the world and crash international financial markets.

But now investors may face something worse.

The danger is that bloated left-wing governments will treat repayment of their debts as optional and refuse to repay when it's not politically or financially convenient. With trillions of dollars of sovereign government debt outstanding, this is a clear and present financial danger to the world economy.

This could be much more disruptive to international financial markets than the option of simply letting Greece fail — which is, after all, what the Greek people voted for.

What they are hoping — even praying — for is that Germany won't call their bluff. Germans have made it clear they won't renegotiate, and they shouldn't surrender to the real blackmailers. Why should their taxpayers finance Greece's fat pensions, early retirement programs and cradle-to-grave welfare benefits?

No one seems to want to call what is happening by its name: the grand failure of socialism. Greece is a nation with a retirement age of around 60, half its young people out of work and an annual deficit that for the U.S. would be the equivalent of $2 trillion a year.

Half the nation's income is spent by the government, the banking system is so depleted that savers can't retrieve their money and, to pay for all the benefits, tax rates can reach over 70%. So an underground economy thrives at the expense of all else.

Economist Larry Kudlow has recommended radical surgery that would improve future prospects far more than larding on additional IMF loans. He wants Greece to cut tax rates sharply, privatize billions of dollars of government-owned assets and sell one of the islands to private investors.

The current socialist government — to the extent it still exists — wants to do the opposite: spend more, tax more and perhaps devalue the currency. No nation has ever gotten richer using this formula.

The tragedy of Greece is that a once fairly prosperous economy has sunk to a new low of despair and destitution. This is what happens when socialism is ascendant and citizens feel entitled to other people's money.

Well, in Greece the money has run out.

The only thing that will save the country is a stiff dose of free-market economics.

But judging from the referendum vote, Greeks still don't know how low socialism can take them.

Read More At Investor's Business Daily: http://news.investors.com/ibd-editorials/070615-760391-socialist-nations-run-deficits-get-angry-when-others-wont-pay.htm#ixzz3fD72Y81P
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