Wednesday, September 19, 2012

A Glimpse into the Future

Liz Alderman's article in the New York Times today, "Euro or No, Economics of Everyday Greek Life is Eroding" provides a glimpse into the future of the western economies.  Economic and civil order has broken down in Greece.  The rising popularity of the neo-nazi party (now at 18 percent of the electorate) is gathering in the fruits of the collapse of the Greek welfare state.  In time, democratic government will collapse in Greece to be replaced by one of the extremes.  The so-called centrist governments cannot deliver and will not survive.

Greeks expect the promises of past governments to be honored.  That is an expectation that has no hope of reality.  Their frustrations are spilling over into everyday economic and political life.  The beginnings of a similar breakdown are evident in Spain, Portugal and Italy.  No government can survive by imposing a program of austerity.  Their citizenry still believes the lies that they have been told for generations.  It is too late to convince them that all of these benefits they have come to expect cannot be afforded.

Gradually, this collapse will extend across the plains of Europe and eventually engulf even France and Germany.   The UK, not a member of the Eurozone, is not immune.  Their fiscal path is a road to disaster as well.  As for the US, the opening bell of the slide to disaster will be heard soon from California and Illinois.

The truth is that no society can survive as an entitlement society except at virtual poverty levels -- the old Soviet Union, modern day Cuba.  The prosperity in the US and Europe that was built on free markets, self reliance, and limited government is being sabatogued by a growing state control of all aspects of economic life and a sense of entitlement by the bulk of their populations.  This is the path to Greece.

Printing dollars and printing Euros -- the current policy of the Fed and ECB -- will only provide a brief breathing space as the western economies weaken.  Fortunately, Asia is not marching down this path and the future is bright for Asia.  But the lights are dimming in the West.  Alderman's article today in the NY Times is one of many recent articles chronicling the slow slide of Greece into anarchy.

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