Tuesday, January 27, 2015

Greece Election Exposes the Great European Disease

The sweeping electoral victory of Alexis Tsipras in Greece-- one vote shy of a majority in the Greek Parliament -- means that European economic policy is finally having to face up to reality.  There is no more money to provide for leftist dreams and schemes.

In Greece, starting a business is next to impossible, corruption is endemic at all levels of government, and work ethic in everyday life is almost non-existent.  To some extent, this is simply the most extreme version of what affects all of Europe.  Laws that "protect labor" mainly serve to freeze out free markets and deny opportunities to young people.  These laws create the "haves" and the "have-nots."  If you already have one of these protected jobs -- great!  Otherwise, you're screwed.

So, what happens next.  Obviously, Greece is going to walk away from it's debts -- sovereign debt is now 175 percent of a stagnant GDP in Greece.  Greece cannot pay that, so walking away is the only available answer.  When Greece walks, the left wing political parties in Ireland, Portugal, Spain, Italy and France will take heart.  Most, if not all, of Europe will walk away from their debt obligations in time.  That is where we are headed.

Meanwhile, the Obama Administration has patterned itself after the very policies that are rapidly destroying the European Union.  Instead of economic growth, the mantra is "fairness."  "Fairness" slogans line the pathway to the Greek solution -- economic stagnation and decline.

Only free markets deliver hope for the middle class.   Watch Greece descend into chaos, as it doubles down on "fairness" solutions.

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