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Harsh Austerity Measures...


By LAO   Follow   Wed, 5 May 2010, 9:24am PDT   1,773 views   17 comments
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Could what's happening in Greece come to American soil?  I'd be curious to know how the DAY TO DAY life of Greek citizens has been affected by these "harsh austerity measures" that would cause hundreds of thousands to take to the streets and torch a bank and kill 3 people.

Seeing all the fist fights and egg throwing in foreign congress/parliaments on television and now bloody riots.  What would have to happen in the U.S. for the general population to revolt?  And how close were we when the market was crashing in March 2008?

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mikey   Wed, 5 May 2010, 1:25pm PDT   Share   Quote   Permalink   Like (1)   Dislike     Comment 1

Possible but less likely here in Federation Territory.
America seems to have endless credit.
We are deflating and the Fed is keeping inflation in check. Many areas of the US have stable real estate prices and secure jobs.
Loose monetary policy does take time to take effect. Hopefully the reins will tighten before more disastrous bubbles develop.
I don't want the dollar store to become the five dollar store.

Kevin   Wed, 5 May 2010, 2:20pm PDT   Share   Quote   Permalink   Like   Dislike (1)     Comment 2

May 1970.
April 1992.

Yes, people can and will riot when they have sufficient reason to.

ZippyDDoodah   Thu, 6 May 2010, 3:15am PDT   Share   Quote   Permalink   Like (1)   Dislike     Comment 3

State/Federal/Local govt. pension plans are a massive problem which, if not slashed, could push us into Greek-like economic troubles. Given the deficit spending trends, it's a mistake to assume that the US is 'too big to fail'. We have a situation of govt employees retiring at age 50 or 55 with pensions that payout 50% - 90% of their highest earning years (often they artificially inflate the last earning year with overtime + sick pay) with insurance benefits on top of that. It's recently come to light the number of govt pensions exceeding $100,000/year + benefits, including some law enforcement officers in CA (as I recall) making over $500,000/year.

It's a situation which, if left unchecked, will result in average Joes toiling at work at age 67 in order to subsidize the Caribbean vacations of 52 year old govt retirees. Let the states and local govts go bankrupt so that their lavish pension plans can fight it out in bankruptcy court like any other creditor.

kentm   Wed, 12 May 2010, 3:46pm PDT   Share   Quote   Permalink   Like (2)   Dislike     Comment 4

Whats happening in Greece is that the public are being asked to pay for the failures of the speculations of the rich and very rightly are rejecting it.

So yeah, whats happening in Greece has already happened in the USA, and was met with a collective yawn.

Ptipking222   Thu, 13 May 2010, 1:58am PDT   Share   Quote   Permalink   Like   Dislike (1)     Comment 5

kentm says

Whats happening in Greece is that the public are being asked to pay for the failures of the speculations of the rich and very rightly are rejecting it.
So yeah, whats happening in Greece has already happened in the USA, and was met with a collective yawn.

Actually, no, that's not the case at all.

What you have in Greece are massive pension plans and overpaid government workers, who get bonuses just for showing up on time.

Added to that is massive tax evasion by pretty much everyone in Greece.

Greece has been in default half of the time for the past few hundred years. Letting it into the Euro was just dumb. Countries like that need to be on their own currency and allowed to devolve into default/inflation every now and then to pay for their largesse.

Ptipking222   Thu, 13 May 2010, 1:59am PDT   Share   Quote   Permalink   Like (1)   Dislike     Comment 6

Stats are already enacting 'austerity measures' in some sense. California's furloughs, cutting of services, etc. are similar.

kentm   Thu, 13 May 2010, 5:04am PDT   Share   Quote   Permalink   Like   Dislike (2)     Comment 7

Ptipking222 says

Actually, no, that’s not the case at all.

Actually, yeah, it is.

http://www.citywire.co.uk/personal/-/blogs/money-blog/content.aspx?ID=398084

The BBC reports that as part of the IMF/ EU bailout Greek leaders are proposing the following measures:
* Public sector pay to be frozen till 2014;
* Public sector salary bonuses – equivalent to two months’ extra pay – to be scrapped or capped;
* Public sector allowances to be cut by 20%;
* State pensions to be frozen or cut, with the contribution period up from 37 to 40 years;
* The average retirement age raised from 61 to 63, and early retirement restricted;
* VAT to be increased from 19% to 23%;
* Taxes on fuel, alcohol and tobacco raised to 10%;
* A new one-off tax on profits to be introduced, plus new gambling, property and green taxes.

Regardless of your personal feelings on the pension plans and speculation on the state of tax evasion in Greece, those are the measures being requested of the people in Greece.

Why should they have to pay for the failed speculation of the banks?

...just like why should we have to pay for the same thing here?

Ptipking222   Thu, 13 May 2010, 7:32am PDT   Share   Quote   Permalink   Like (1)   Dislike     Comment 8

Because it's not the speculation of the banks that caused their problem. The Greek problem is very simple: the country pays out way more in wages/pensions than it takes in taxes.

The austerity measures are aimed at reducing government payments and increasing taxes.

Banks have nothing to do with that end of the problem.

The banks are exposed because they lent Greece's government money (you deposit money in the bank, they lent it to the government). Not just Greece's banks, Germany and Ireland and others too lent to Greece's government.

Greece's government was financially incompetent. So this is an issue of Greece's government screwing over the banks (though, I don't shred a tear for the banks, they just shouldn't have bought Greek government bonds).

Either way, Greece needs to default or they need to do austerity measures. I favor default, since they're going to do it anyways, so why waste everyone's time. Either way, the citizens are screwed, and deservedly so, since you shouldn't count on your government for cradle to the grave welfare.

If there wasn't austerity measures and Greece was on the drachma, they would have had hyperinflation and 20% unemployment, which is typical for these Club Med countries pre-Euro.

You can argue that Germans and Irish and other Europeans (and even Americans to a much lesser degree) shouldn't have to bail out Greece and the other PIGS. Other countries citizens end up subsidizing these bailouts because their banks are exposed to Greek debt. That I would agree with you. If anyone deserves to be rioting, it should be in Berlin, not Athens.

But screw the Greek people themselves, you can't have massive pensions/welfare and not pay for it and expect it to continue indefinitely.
kentm says

Ptipking222 says

Actually, no, that’s not the case at all.

Actually, yeah, it is.
http://www.citywire.co.uk/personal/-/blogs/money-blog/content.aspx?ID=398084
The BBC reports that as part of the IMF/ EU bailout Greek leaders are proposing the following measures:

* Public sector pay to be frozen till 2014;

* Public sector salary bonuses – equivalent to two months’ extra pay – to be scrapped or capped;

* Public sector allowances to be cut by 20%;

* State pensions to be frozen or cut, with the contribution period up from 37 to 40 years;

* The average retirement age raised from 61 to 63, and early retirement restricted;

* VAT to be increased from 19% to 23%;

* Taxes on fuel, alcohol and tobacco raised to 10%;

* A new one-off tax on profits to be introduced, plus new gambling, property and green taxes.
Regardless of your personal feelings on the pension plans and speculation on the state of tax evasion in Greece, those are the measures being requested of the people in Greece.
Why should they have to pay for the failed speculation of the banks?
…just like why should we have to pay for the same thing here?

zzyzzx   Mon, 4 Jun 2012, 12:56am PDT   Share   Quote   Permalink   Like (1)   Dislike     Comment 9

kentm says

* The average retirement age raised from 61 to 63, and early retirement restricted;

That's weak. They should have raised it to 75. No wonder their austerity isn't working yet. It's way too limp wristed.

PockyClipsNow   Mon, 4 Jun 2012, 5:04am PDT   Share   Quote   Permalink   Like (2)   Dislike     Comment 10

I read in greece you can inherit a pension. But only for unmarried duaghters. So I suppose right after they passed that 'law' the marriage rate dropped in half. hah.

I read about a small city in the US that was banrupt recently they also made it so children and grand children could INHERIT THE PENSIONS of city employees. Talk about cuba!!! we are half way there - rich people are all gov employees in cuba.

bob2356   Mon, 4 Jun 2012, 5:34am PDT   Share   Quote   Permalink   Like (1)   Dislike     Comment 11

Ruki says

Ptipking222 says

the country pays out way more in wages/pensions than it takes in taxes.

You talking about Greece?.....or California or Illinois or New York state or the several hundred cities/towns in the US that are insolvent because of their pension liabilities, if not outright bankrupt because of them?

Obey The Tripods

Several hundred? You are off by an order of magnitude. Probably closer to 40-50% of states, counties, cities, towns, independent authoraties, etc. cannot meet their future pension/health care obligations no matter how much taxes are raised. What has happened so far is the tip of the iceburg, the next 10-15 years is going to be a very rocky ride.

zzyzzx   Mon, 4 Jun 2012, 5:44am PDT   Share   Quote   Permalink   Like (1)   Dislike     Comment 12

http://www.bloomberg.com/news/2012-06-03/aig-chief-sees-retirement-age-as-high-as-80-after-crisis.html

Says 80 should be retirement age,.

lisalisa   Wed, 6 Jun 2012, 1:21am PDT   Share   Quote   Permalink   Like (1)   Dislike     Comment 13

Hmmm... makes me wonder if Pensions and Social Security and welfare seem like a packaged government Ponzi scheme.

Wait... we have that now... DOH! :^{

Leopold B Scotch   Wed, 6 Jun 2012, 1:28am PDT   Share   Quote   Permalink   Like (1)   Dislike     Comment 14

mikey says

I don't want the dollar store to become the five dollar store.

Don't hold your breath. It used to be called the Five-and-Dime.

(The $ 0.05 and $ 0.10 store, if you will.)

zzyzzx   Wed, 6 Jun 2012, 2:00am PDT   Share   Quote   Permalink   Like (1)   Dislike     Comment 15

mikey says

I don't want the dollar store to become the five dollar store.

We already have them around here:

Zakrajshek   Wed, 6 Jun 2012, 2:06am PDT   Share   Quote   Permalink   Like (1)   Dislike (1)     Comment 16

80 come on. There's some people (slave drivers) who never want to see others released from the yoke. They think that's why we were all born... to work... for them. Let this failed AIG dork work until he's a 100. There are many though, who don't know what to do with themselves without a job (someone telling them what to do)

There is no reason the retirement age shouldn't be going lower. Due to increased productivity, one person working today produces 4 times what a worker in 1950 produced. Wall street and corporations have gamed the system so they get almost all of these gains.

Thoreau wrote in the 1840s that he was able to produce all he needed for the year by working six weeks in his garden. The balance of his time, he said, was his. Save your money, live reasonably, and retire when you decide, not the government.

zzyzzx   Wed, 6 Jun 2012, 2:24am PDT   Share   Quote   Permalink   Like   Dislike     Comment 17

Zakrajshek says

Thoreau wrote in the 1840s that he was able to produce all he needed for the year by working six weeks in his garden. The balance of his time, he said, was his. Save your money, live reasonably, and retire when you decide, not the government.

I agree. But to those too stupid to save, their retirement age should be 80. Remember when Social Security was first introduced the average lifespan was something like less than a year after you began to receive benefits.

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