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Slow Motion Financial Collapse Over There and Over Here

September 4, 2012

One out of four Greeks is looking for work.  Still, I don’t believe the Greek economic collapse is inevitable and destined to last centuries.  It could, but it need not.  I could be over in a few years, but I doubt the Greeks will stop their fantasy belief that their nation is special.  (Well, sure they are special, just like the rest of us.)  It continues to cost more to ship goods in Greece because Greek truckers purchase licenses to operate, much as taxis do in some US cities.  That is one reason food is about half-again more expensive in Greece.  The license to open a pharmacy in Greece is $400,000 and pharmacists are guaranteed a 35 percent profit.  That is why medicine is so expensive.  Greece is one of the last soviet style controlled economies with about 70 closed profession.  Strip that away tomorrow morning and prosperity would surge by the afternoon.  New businesses would start by evening.

The solution is obvious and yet Greeks can’t let go of the past.  They avoid economic freedom out of their fear of poverty and this very fear guarantees their continued economic collapse.  Perhaps it will take generations for them to recover.  I hope they will at least serve as a useful model of things to avoid.   Greece can demonstrate the failure of the socialist model..  and be a new model of Greek tragedy until they reform.

Spain is only inches behind.  One third of  the deposits in Spanish banks have been withdrawn and sent abroad.  The rich did so a while ago.  Now it is the educated middle class who are taking jobs in other countries.  They take their money and their future with them as they leave.  Not since 1492 has their been such a drain of Spanish talent.  Have the Swiss and Russians started to buy Spanish real estate yet?

All this came to mind when I read that California has a larger debt than Greece, though not as much per person.  The state debt in California is $16,500 per person.  Call that 64 thousand dollars per worker, and twice the average annual Californian’s income.  There are subtle differences between California and Greece.  California has sold more of  its future to public unions, not private interests like the Greeks, though the pensioners of Greece are like our public retirees and the regulatory climate in California is almost as stifling as Greek bureaucracy.  I continue to wonder who would buy California state and city bonds except union pension funds that are trying to pull a fast on on a bankruptcy judge.

Yes, all that may be true, but are the citizens of California, Illinois, New York and Maryland willing to change how they vote?  I doubt it.  We cling to the past in times of stress even though the values that served us once do not serve us in our present situation.

Ah, we are all Greeks now.


Why am I not rich if I’m so smart?

This one is for you, Charles.


One Comment leave one →
  1. rc1111 permalink
    September 7, 2012 5:16 pm

    I keep telling you, your problem is that you are too smart and the issue with that is you can figure out very logical solutions to problems politicians cannot. Sometimes it is nice to be blissfully unaware of the problems of California, or is it Greece? It is a state of mind not unlike the old Mad Magazine cover with Alfred E. Neuman doing the see, hear, and speak no evil.


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