Thursday, May 6, 2010
More on Greece
The German periodical Der Spiegel has this very good article with some very handy graphics (HT A&L Daily). You can use them in conjunction with the ones mentioned in my post from a couple days ago. What I (and others) like about these is they show that the money is not owed to other nations (implying governments) but to banks and financial institutions. This makes the role of private financial markets clearer, and should bring home the potential for a possible banking crisis.
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2 comments:
I could not read all of the article so forgive me if the answer lies somewhere in it. The government bailed out the banks but there is no one to bail out the government. What are the possible successful solutions for the national debt? Of course we could "tighten our belts" but that can send the nation into a depression. In fact that is what Hoover said for Americans to do before the Great Depression. We know that if we keep going on the path we are our nation will crumble but wouldn't we do the same in a depression? Is there any happy median or are we for the most part screwed?
But there is someone to bail out the government. That someone is the individual.
All government programs have to be paid for. I think it was the economist Frederic Bastiat who said something like "Everyone wants to live at the government's expense, until they realize that the government lives at their expense."
And regarding President Hoover, he also initiated some deficit spending to stimulate the economy. According to some sources, Hoover even tried to work with President Roosevelt to put more projects to work between the time of the election and Roosevelt's inauguration. But the incoming President didn't respond.
To your last question, if by "are we screwed?", you mean is a collapse inevitable; the answer is no. If you mean "Do we have to pay for our debt situation?"; the answer is "yes, one way or another." Higher taxes, higher inflation, slower growth, some combination of the above could avoid a collapse. But each have their own political and social costs.
Do you think we have the political and social courage and will to do what is needed?
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