U.S. stock-index futures declined as Greek political leaders struggled to form a government, raising concern the Mediterranean nation may default on its debt as early as next month.
Antonis Samaras, the leader of the New Democracy party in Greece, said he failed to forge an agreement to form a government after weekend elections. The attempt will now pass to Alexis Tsipras, the head of Syriza, the second-biggest party, which has vowed to cancel the austerity conditions related to the financial bailout.
And do exactly what?
This is the amusing part of all these debates — you have those who say “no more austerity!” like being austere is a dirty word. It in fact simply means to live within one’s means — to balance budgets, to pay for services desired with taxes.
How is that bad, if I may ask?
More to the point how does any politician — or political party — defend anything else?
It’s one thing to temporarily spend more than one makes when there is an existential threat to your existence. When you’re at war, for example, and that war is for your survival (you’re being invaded, perchance?) there’s a strong argument for deficit spending. After all, if you lose the war your debts will not matter, will they?
But this isn’t the case in Greece — or anywhere else at the present time. There are no wars for survival among the western world at present and there haven’t been for quite some time.
So where are the balanced budgets?
More to the point refusal to face this reality — by any political candidate, office-holder or party — is an active fraud against the people.
Simple — it’s a matter of division.
Remember that for every unit of GDP (production) there must be one of monetary credit or currency to pay for it. If there are more units of credit emitted then the price per unit of GDP goes up. This is “inflation” in point of fact. If salaries rise exactly as does the emission of credit there is no net effect whatsoever; the only way deficit spending can “add growth” is by stealing from someone!
That is, this is a zero-sum game and there’s no way around it. It’s a matter of third-grade mathematics despite the refusal of most politicians to speak to the truth and recognize this fact.
Unfortunately for Greece (and everyone else) there is no such thing as a free lunch. But there are still plenty of people who believe there is, mostly because the electorate in the nations of the western world continue to demand “hand outs” of various forms (sometimes arguing they “paid for them” when in fact the money was stolen and spent elsewhere) and a great way to get fired as a politician is to say “No.”
Nonetheless Greece and the rest of the world must deal with the fundamental realities of government and monetary policy: All government services must, to be sound, be paid for with current taxes.
It really is that simple folks, despite the continual lie factory that we have in Washington DC and the Europeans have in their respective Parliaments.