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‘The Paths of Greece’

September 14, 2012 – 5:02 pm

There was a recent article by an IMF official whose area of responsibility included Greece pointing out that Greece is going to need a third bailout of some kind. They have not met the required political changes to reduce their public sector debt that has not been sustainable for years. The public sector massive size and extremely poor tax collection has made it a failed country. They just have not admitted it yet and the efforts to fix it, so far, is not working. One solution, and the one that appears to be most likely, is for them to leave the Euro currency and start printing their own. That will sink them deeper into recession.

The disturbing parallels in this story is debt. Greece’s debt, as they supported an ever growing federal government, drove them to the place that they now suffer under. In the U.S., our debt is taking us down the
same road. Are we headed to that same place? Can we support an ever growing federal government? People in Greece were able to retire at 50 years old from government jobs and when that was pushed up a few years there were riots. Will our public employees do the same when their benefits are no longer sustainable? Social Security is running out of money, Medicare is on the same path and how will we ever pay back all the borrowed money we spent to extract us from the 2008 deep recession? Actually, paying back the borrowed money seems to be the easier of the three issues.

We can always increase taxes and try to cause inflation. Oh! We are already doing that. OK, more taxes and more inflation then.

Good Trading
Steve Peasley

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