A country delivered into desperate straits—by greed
We cannot go on living in a country in this condition. Soon Greece will be like an African country.Things are really, really bad in Greece. The Daily Mail paints a portrait of a nation plunged into a misery worse than anything it has experienced since the Nazi occupation.
And what was it that brought this disaster about?
The crisis was partly caused by politicians hugely increasing the size of the public sector after the country joined the euro.So it was two factors: the euro, plus the usual desire of statist politicians to spend as much as they can. In normal circumstances, that desire is restrained—minimally—by the fear of public bankruptcy. But after the EU had adopted the single currency, the Greek political class no longer felt bound by that limit. They felt they could put the country into much debt as they liked. Why? Because now that the EU had become a monetary union, a loan default by any member would disastrously affect the whole in a manner that would not happen if each country still had its own currency. Therefore the whole could be counted on to keep paying the debts of any member such as Greece, and thus the usual desire of leftist Greek politicians to keep expanding the public sector was liberated. Statism with all its vices is a constant. The euro spawned statism on steroids.
The Greek catastrophe is filled with lessons for the U.S. Like their counterparts in Greece, Democratic politicians are driven by a simple, irreducible desire, the desire to keep expanding the public sector no matter what, whether for the sake of their pet ideologies, their client groups, their friends, or themselves. They’ve demonstrated this in the last three years more clearly than ever before. Despite the financial crisis, they are coldly, shockingly unrepentant about wasting inconceivable amounts of taxpayers’ money, as seen for example with the stimulus and the Solyndra fiasco, and they want—greedily, passionately want—to do more of the same. Consider their recently revealed requirement under Obamacare that the government provide totally free birth control to every woman in the country who wants it, and their notion, never heard before in this country, that “access” to birth control, by which they mean totally free birth control, is an essential principle that no one may question. The Democrats have thus revealed the essence of their political being, which is that they will accept no limit on public spending, including the most wasteful, ruinous, and ideologically driven public spending, so long as they are not forced against their will to accept a limit by some power greater than themselves. Left to their own devices, leftist politicians will never behave rationally. Their ideology—and their greed—forbids it.
In cataloguing the names of the greedy, we should not forget the bankers. They made billions in interest and commissions from the loans they made to Greece. They bankrolled the politicians’ election campaigns and encouraged them to spend to excess in the interest of creating demand for more loans.LA replies:
A fact-free denunciation of bankers for their “greed”? Or rather, a denunciation of bankers for their “greed” in—gasp—being in the business of making interest on loans?February 19
Alexis Zarkov writes:
I have put Mr. Auster’s final paragraph into my personal EverNote database with the tags “politics” and “liberalism,” as it provides the most succinct statement I ever read about our march towards an all encompassing administrative state. The Greek nation provides an almost laboratory example of what happens in the final phase of modern liberalism: chaos and bankruptcy. The Greeks are now wholly dependent on the charity of Germany. If the Greek government withdraws from the euro, and defaults on its bonds, the Greeks will be unable to buy critical necessities as their economy cannot export enough to afford the imports it needs. I fear that the U.S. will feel obligated to rescue them. After all Obama has a magic checkbook, ultimately backed up the Federal Reserve’s capacity to create money from nothing in infinite amounts.LA replies:
Coming from Mr. Zarkov, that is high praise.LA writes:
Reader Thomas F. was excluded from VFR some time ago. I make an exception and post the below comment by him, as I think it’s instructive as to a certain mentality. He is replying to my reply to Jeff W.:Joseph C. (who is a commercial banker) writes:
The problem is not the bankers lending the money per se. They are in the business of doing so. But I will also agree with Jeff W. when he says the bankers and politicians work as a symbiotic team.LA replies:
Very interesting. What you are showing is that it is not simply the case (a) that banks are in the business of making loans, (b) that they make loans to any credit-worthy person or entity that approaches them for a loan, and (c) that they are not responsible for a government’s decision to borrow money and cannot be blamed for such a decision. What you are showing is that the banks themselves are active agents—and, in the case you discuss, highly irresponsible agents—in generating government demand for loans. First, they made loans to Mexico that they should have known Mexico would have difficulty repaying. Second, they pushed the U.S. government to bail out Mexico so that the banks would not lose their money there. Third, the money the U.S. government gave or loaned to Mexico had to be borrowed from banks.Jeff W. writes:
The assertion that spendthrift politicians and bankers work together symbiotically can be backed up with an enormous collection of unassailable facts.Kathlene M. writes:
Just for your information, Mitt Romney’s top donors are also banks. Many of the banks which supported Obama in 2008 are now supporting Romney.Jonathan W. writes:
It may be true that the bankers are active agents in the sovereign debt crisis, but the fact is, without the statist governments that bail out everyone who acts irresponsibly, the bankers’ actions would not be an issue for anyone but themselves.LA replies:
Posted by Lawrence Auster at February 18, 2012 04:06 PM | Send