Get a read of this…..Greece’s Middle Class Revolt Against Austerity:
This business owners’ absolute refusal to pay any taxes resembles an uprising of the ownership class, rather than the working class, a rebellion of the self-employed business owners who have long been the backbone of Greek society. These are not the people who weaseled their way into Greece’s oversized civil service; these are people who put their money in the private sector, working 12-hour days, seven days a week. Or so Belitsakos says.
That’s a problem. And why is this happening? Read this from France….
“If there is one field in which one must deplore that imagination took power without ever wanting to assume the responsibilities, it is finance: the citizens of the communities concerned will have to pay for twenty years for the nutty creativity of banking sector hotshots. Yet we know what comes next: more taxes, less spending and a freeze on future investment,” the paper concludes.
Only if they’ll pay…
The reality is this: The alleged “prosperity” that was bought during those years was false.
No government can in fact provide services to the population on a durable basis that the population will not pay for with current taxes. Not here, not in Greece, not in France, not anywhere.
All the claims of “financial engineering” are in fact lies. None of them actually do work because they can’t work. It is mathematically impossible over the longer term.
Look, go back to Excel. In cell A1 put in “10” and in cell B1 put in “10”. This will represent 10 units of GDP and 10 units of debt (pick your units, billions, trillions, euros, dollars, whatever)
In cell A2 put in “=A1 * 1.04” That’s 4% GDP growth. Now extend that downward 100 rows (CTRL-C on cell A2, then click cell A3 and drag it down to A100, then hit CTRL-V)
In cell B2 put in “=B1 * 1.07” That’s 7% debt growth in the economy as a whole. Now extend that downward 100 rows too just as above.
Take the range of A and B and graph them.
That’s what we tried to do. These are not hypothetical numbers – the approximately 3% spread has existed since the 1950s and it is mathematically impossible for it to work in the long term. When this became apparent in the 1980s we stomped on the accelerator with more and more scams to keep the illusion alive.
Now, if you want to see how badly you’re really screwed, set up a column “C1” and make it “=B1 * .05” This will be the blended rate of interest across the entire debt. Extend that and include it in the graph.
Go ahead an play with the numbers all you want. You will find the following is absolutely true as a matter of mathematical fact:
- No matter what you do, so long as debt expands faster than output (GDP) the two curves will run away from each other. You can change how long it takes but not the outcome.
- No matter the rate of interest, so long as it is positive, you eventually cannot pay. Again, you can change how long it takes before the interest expense exceeds all of your output (and thus it is impossible to pay) but not the outcome.
It does not matter if you like these facts or not. It does not matter how you figure the percentages or what you do with interest rates. You cannot change the outcome so long as debt expands faster than output. This is a mathematical fact and no amount of bluster and bullshit will change it, any more than you can legislate that 2 + 2 = 5 and actually make it so.
Now here’s the worse news. That 4% GDP and 7% debt growth? The latter is also the rate of the growth of the US Federal Government over the last ten years -= it has doubled in size over the last decade, while the economy has expanded about 40%, or ~3% annually. The fraud of “baseline budgeting” and the claims of both of our political parties are mathematically certain to lead to the same result as you see in that graph — unless we cut it out.
This is also a perfect illustration of what’s wrong with socialism – a real-time demonstration. Eventually the only people left working to support everyone else decide they aren’t going to do it anymore OR the taxes become so high, it just collapses the business.