My hair may be going gray but if it’s all the same I think I’ll forgo any Grecian Formula hair treatments and just let it happen because it is thought that hair colorants can make it become thinner and I would prefer to keep the hair I have, even if it does become gray. The U.S. Federal Government, on the other hand, has been on the Grecian formula for the better part of the last 100 years but now the treatments have greatly increased. For the sake of our fiscal sanity (if not our hair), our leaders need to look at Greece and see where that formula ultimately leads.
We have all seen the images of the riots in the streets of Athens. Three people were tragically killed when the rioters burned a bank. The violence centers on the fact that these rioters see their free ride coming to an end because the government can no longer afford to provide it. In reality, they never could afford it. If these rioters cared about their country they would accept the situation as necessary. But just like a junkie, they will do anything for another fix; easy money instead of drugs.
During the angry demonstrations, the rioters shouted, “War against the capitalists” and “No more sacrifices.” Many of the rioters were civil-service employees who obviously do not understand a fundamental truth; without the private sector (those hated capitalists), the public sector could not exist.
Facing a crippling debt that has reached about 125% of GDP, the Greek government passed an austerity package. After many years of continuous pay increases for public sector employees, the package calls for pay freezes, pay cuts and lay-offs. In addition, many generous bonuses will be capped or eliminated altogether. Reductions in the pension plan include an increase in the retirement age; increase the service time requirement to become fully vested, and lowering of pension benefits. The value added tax (VAT) will increase from 21 to 23%. Taxes on fuel, alcohol and tobacco will see a 10% rise. There is also a plan to crack down on tax evasion. In the future, the government looks to reducing the economy’s reliance on the public sector with the possible privatization of some industries.
Rather than to let Greece solve its own problem or become another shining example of why socialism doesn’t work, the European Union and the International Monetary Fund have come up with an ingenious idea; solve Greece’s debt problem with … more debt. A cool $1 trillion has been pledged to bailout Greece and other EU member nations on the brink of bankruptcy. Just like our bailout plan, the Greek bailout plan is doomed to failure, because it does not address the underlying problem. It simply delays the inevitable. A day of reckoning will come.
Just like Greece, the U.S. is facing a debt bomb of its own. According to an article in Investors Business Daily, U.S. treasury bonds could lose their AAA rating in 2017 or 2018 as the cost to service the debt reaches above 18% of federal revenue. Under more adverse conditions, that tipping point could be reached as early as 2013. Some economists see the federal debt reaching 90% of GDP in 2020, when it stood at 53% of GDP at the end of 2009.
Much of America’s debt problem is the same as that of Greece; the entitlement mentality. The people of Greece, most of who work (if you want to call it that) in the public sector, have been conditioned to believe that they are owed ever increasing wages, pensions and benefits. Politicians have pandered to them for their support. It doesn’t matter a whit to the recipient that the economy of their country can’t possibly sustain that level of benefits; they are entitled to it. Once they are told that their benefits may have to be reduced or eliminated, their frustration boils over in rage.
The situation Greece is dealing with is the same situation that destroyed the Soviet Union and will destroy any other socialist nation. Margaret Thatcher summed it up better than anyone else I ever heard on the subject, “The problem with socialism is that eventually you run out of other people’s money.” Lady Thatcher’s profound statement of fact is also a warning, especially for the United States. Get off the Grecian formula and get off it fast. The Grecian formula is socialism; the solution is capitalism.