The crisis in
As to the former, wealthy weasels collude with corrupt bureaucrats to avoid paying taxes, which seriously truncates tax revenue.
The latter involves lots of ghost workers and jobs that are way too cushy. Ghost workers are those that only make their presence known when it’s time to collect their paychecks. Featherbedding is best described by an experience I had working on the NY subway system back in 1964. It was World’s Fair time and I got a temporary 6-month job as a car cleaner for the line that served the fair.
It was graveyard shift, . We had a quota of 8 cars to sweep a night, but most nights it didn’t take much more than an hour to do the work. We’d punch in at 10, sit around the lunch table till after 11, go out and sweep 4 cars and then sleep in one of the cars till lunch at 2. After lunch we’d go back and sweep 4 more cars then take another nap till punch out time at 6. If anybody hadn’t shown up for work, there’d be overtime, 2 hours for 2 additional cars.
If you had a puke to clean up that could take extra time but the cars were new with smooth floors and hard plastic seats so very easy to clean. They also had only lateral seating, that is, against the sides of the car. It was on the city’s IRT line, the oldest of the three subway systems and the cars were narrower and shorter than in the other two newer systems. Since the cars on the newer lines were wider there was room for perpendicular seating so the two types of seats, lateral and perpendicular, alternated, making lots of little corners to sweep. And being older than the new cars I worked on, the floors were kind of rough. Those cars actually took some time to sweep, though still nowhere near one hour per car.
It was union work rules that created lots of easy jobs. I’m somewhat conflicted on the subject. On the one hand I like the idea of jobs not being excessively stressful and frantic. On the other, well, it does get boring not having anything to do and besides there’s always productivity to consider. Breaking down costly and unproductive work rules was part of the Reagan legacy. In some ways it was good, but the industrial world has carried it way too far in the constant drive to push workers harder and harder to eke out every penny of profit. Every downsizing involves forcing the remaining staff to work harder.
In order for
Now its annual deficit is running at nearly 14% of GDP and total debt is about 115% of GDP. The country can no longer finance its debt, since investors are now asking for very high interest on Greek government bonds out of the very real concern that the country may default. It cannot afford the interest. If it had its own currency instead of using the Euro, it could just print money, thus devaluing the currency and lessening the debt burden. It can’t print Euros so it’s either got to pay or default.
The only way
The high rollers would pay for sure in a default scenario, that’s why European countries and the IMF are frantically putting together a trillion dollars worth of guarantees and bailout money to keep their troubled economies afloat, otherwise their banksters will take a deep hit and they’ll wind up bailing the banks out directly. The Greek bailout is in the form of debt which, though it will be on favorable terms and save the country from default, will seriously add to its total debt burden… so maybe only a temporary fix.
Default, on the other hand, is also no bed of roses. If the deficit is 14% of GDP then the country is getting 40 to 50% of its budget from borrowing. In a default scenario, that source of money instantly dries up so the result is cutbacks far more drastic than proposed in a bailout scenario. Moreover, instantly removing 14% from the economy would throw it into a tailspin with unemployment spiking and economic hardship across the board.
The root of the debt problem, it seems to me, is the mania for growth. In that scenario, some level of budget deficit is considered a good thing because money is being injected into the economy. According to the theory, borrowing that stimulates the economy is not a problem because the resulting growth lessens the impact of the debt. However, problems arise because governments tend to get hooked on debt – it’s so much easier to borrow than tax – and they become unable to rein in spending to match income. Eventually, as we see in
The debt/deficit situation in the
The dollar is temporarily riding high against the Euro because of the Greek problem but
However, if the
In any case the prognosis isn’t pretty.