On the Path to Athens

 

 

"Hey - no news is good news!"

 

True confessions. I have wanted to visit Greece, but so far, I have not. I have hesitated about putting it on my "bucket list", as Greece today is not the Greece of yesteryear. Much, much too volatile for me right now. In fact, it is beyond volatile - it is a mess. It has shown the world a textbook example of "Ponzi Style" government. Most governments in Northern Europe have taken notice of the mistakes Greece has made. The United States on the other hand, has not. In fact, we are marching down (of stumbling on) the path to Athens.

So how is Greece doing today? Greece is part of the PIGS group (Portugal, Italy, Greece and Spain). They all have big problems, but the biggest is Greece. The ship of Greece is still taking on water, only not as fast. The austerity measures as mandated by the government and world financial institutions who have pouring money into the country are starting to take effect. However, even with that, Greece just had their 20th consecutive quarter of contraction. Their economy continues to shrink. A side effect of the contraction has been the unemployment rate. Their jobless rate hit 27.6% in May, with youth unemployment again bearing the brunt - around 65%.

Meanwhile back in the good old US of A, things are going much better. Not too long ago, I would look at our National Debt Clock with a nervous anticipation. It was spinning out of control. Our spending still was outstripping our revenue. Even with more new taxes taking effect, the Debt Clock continued to spin.

Then as if a magic spell happened, about three months ago the clock stopped spinning! It as if we were picked up while stumbling down the path to Athens! Our debt problem was solved! No more spending needed to by cut and no more new revenue needed to be collected. We just stopped the clock! Just as Ponce de León wanted to cheat death and aging by finding the Fountain of Youth, somebody in the Administration wants to cheat our debt future by stopping the Debt Clock.

The only problem with this solution is this - bad news does not get better with age. Hiding our heads in the sand will not make the problem go away. Despite how many issues the government can flood us with to blur our vision, the tumor continues to grow. Because the debt clock has gone from a reliable source of information to nothing more than a political tool, all we now only guess how much we owe. My guess is it is $17.2T range, or something close. In any event, it is over the statutory debt limit we are currently allowed to have.

Bob Dylan wrote a song years ago which said "a hard rain's gonna fall". The clouds are gathering, the storm is coming. No matter how many "tricks" Treasury can come up, the day of reckoning will be upon us sooner rather than later. Forget Syria - the real enemy we face is our own lack of financial discipline. Until we understand that, we will continue to stumble down the path to Athens.