Ya I think we agree on the important issues, like what needs to be done. Also I enjoyed your comment about if PIGS didnt have Greece, and I thought it would be awesome if it was called PIS. And I know PIGS is kind of an unfair assessment for the countries involved, some EU countries are running higher deficits than PIGS, like France for example. But F doesn't fit nicely into PIGS I suppose.
France has a 7.8% deficit. So no it is not worse than Spain, Portugal or Greece. Then again Spain and Portugal and Greece are not much worse if at all worse than the budget deficits of the UK and US.
Problem with the PIGS acronym, is that it was brought forward by especially US based media. CNBC has been really bad even today, promoting rumors instead of facts, promoting Euro skeptics and speculators over unbiased sources. Just now, CNBC USA is spreading a rumor that Spain is going to ask for a bailout.. wth, how about sticking to facts?
Yes Greece was bad, but Spain and Portugal are so far from being Greece that it is laughable. The US is way closer to Greece than these two countries. And this has been my point from the start, this rush against Greece and now the rest of the Eurozone is motivated by populist kitchen economics, greed and speculators and not facts.
Anyway...
I think its always been a problem, just because the symptoms aren't being immediately felt or haven't led to this kind of crisis in past recessions doesn't mean over spending isn't a problem. Also past recessions were smaller than this one, and didn't last as long, as this is first time since the 30s the entire global economy went into recession at the same time.
The recessions I am talking about were global, but yes not as bad as this one, but the late 1970s oil crisis was bad.. very bad, but often forgotten now days. The oil crisis of the 1970s forced the UK to the IMF.. funny how that is not reported much on anymore. It almost bankrupted Denmark and other European countries.
But since then the US has been deficit spending, and not a peep about it.
Long term over-spending is a problem, counting on constant and continuous growth is a problem, which is what Greece did.
No that is what the US did. What Greece did was much different. This was a combination of corruption, lack of tax collecting methods, and over all lazzie faire attitude, but the biggest problem was.. they lied to the markets. It is the last part that is the critical part.. they lied. So we can trust the Greek numbers, which drives up the risk.
Now I'm sure Greece, just like most countries, had some wiggle room where they can tolerate some decrease in growth while still being able to pay their debts as they mature. Which is why this problem is coming up in the last few months and not when the growth stopped back in 2006-2007. However its just speculation on how big that wiggle room needs to be, and quite frankly it would make me uncomfortable thinking the future of the country is based on some guy's ability to guess decades into the future.
Greece could pay its debts no problem if it was not for the run on the country, and that is the problem! Speculators pushed up the yield on the debt, and that made it much more expensive to lend money. The markets panicked basically.
Sure the Greeks were to blame for a lot of it, because they lied about their economic figures and that meant the trust in what the Greeks said was gone, but a huge majority of the problem comes from speculators being able to earn money on a Greek default, just as they earned on the Asian crisis in the mid 1990s and pushing the UK out of the ERM or what ever it was called. It is not the first time speculators have done this and it has got to stop in my opinion.
Plus I'd know that politicians would likely be willing to sacrifice some of that room for more gain now, after all they can predict 5 years ahead better than 30. So if the next 5 looks good, forget about the 25 after and push that new budget through and collect your votes for throwing more money out to the people.
You cant predict that far in the future (the 30 year). It is unrealistic. That is why budgets are 1 to 2 years maximum.
Members should stay on topic.