I have written so much about the Greek financial crisis (here, for example) that I don't know what more to say except, "told ya." Now, of course, one need not be the Great Amazing Kreskin or Nostradamus to have foreseen the disaster that has befallen Greece. When you spend what you don't have, you end up with nothing but debt. Not hard to understand unless you're a pandering politician living off the crowd's adulation and the taxpayers' money.
The press is full of stories about Greece, about last minute deals, about an impending economic explosion or implosion, the stock market is jumping around, and the European and the international political classes and clowns that control money and finances are issuing about as many statements about the crisis as they do debased currency notes. The bottom line is a painful one, but one best confronted sooner rather than later. Greece must drop the euro, get out of the EU, and regain its independence. The Greek economy and currency must have its value set by market forces and not by bureaucrats in Brussels and Athens. This will prove, as I have written many times, a very painful and disruptive process. Greece will have to become a responsible world citizen and not depend on the German ATM which has bankrolled its spendthrift ways until now--tough, I know. When the EU went from a trade zone to an attempt at creating the United States of Europe, it wrote its death warrant.
Lest it appear that I only ridicule Europe's pretensions, let me turn to something closer to home: Puerto Rico, a great place, with a great history, and some truly fine people--many of whom are proud veterans of the US military. In the past, I had thought about retiring there, but it has become a financial and economic mess thanks largely to progressive policies which have saddled the island's 3.6 million people with a public debt in excess of $72 billion. Puerto Rico's Democratic Governor Garcia Padilla (note: most news stories do not list his party affiliation) has announced that Puerto Rico cannot pay back the debt and needs help of various types. Neither he, nor most media accounts, however, go into how Puerto Rico got into the hole in which it now finds itself: e.g., huge transfer payments, corruption, unrealistic minimum wage, heavy taxation, bizarre federal restrictions on which ships can traffic goods to and from the island, etc. Those wiser than I will have to deal with all those issues . . . right. I am sure the "experts" will come up with some sort of paper-over "solution" that will solve nothing but kick the can down the road until the ultimate dead-end looms.
The long-term solution, however, is independence for Puerto Rico. Just as is the case with Greece and the EU, Puerto Rico is not a good fit with the rest of the US economy, and has become a ward of the federal government. Puerto Rico should go it alone and, as with Greece, let the international market set the value for Puerto Rico's economy.
Borders serve a purpose. The progressive obsession with doing away with such borders can prove very destructive--as we see in Greece and Puerto Rico and in the US Southwest.
Now, to California . . .
I've been to Puerto Rico and enjoyed it but there is a serious violence problem. Retirement would be a questionable. I have tickets (prepaid unfortunately) for Greece in September and am watching what happens with great interest. I had planned to spend a minimum of time in Athens as I have been there. The rest of the country may still be iffy in September. Watching the news.
ReplyDeleteDo you think the Puerto Ricans will ever find enough votes for independence? I understand that those who favor the status quo are the majority, the ones who want statehood come next, and the independecistas are last.
ReplyDeleteWhat happened to Luis Fortuno's economic recovery in Puerto Rico? He served as governor from 2009 to 2013, during which time he cut the annual deficit from $3.3 billion per year to $330 million, with a balanced budget expected by July 2013.
ReplyDeleteAs recently as 2012, Fortuno was the darling of the Republican party, speaking at the Republican National Convention to great acclaim. Wikipedia: "Romney spoke highly of Fortuno when asked if he had a list of potential Vice Presidential nominees, stating that Puerto Rico's governor is “a solid conservative and a firm leader”... "and he certainly qualifies as one of the great leaders of our party." Fortuno lost his bid for re-election in 2012 by a very narrow margin to Alejandro García Padilla, the one who is now proclaiming Puerto Rico's economic doom.
Here's a pro-Fortuno post that outlined his many successes as governor, particularly in economic policy:
http://conservativereport.org/luis-fortuno-puerto-rico-economic-revival/
Here's an anti-Fortuno post cheering the election of his opponent, the guy who now says that Puerto Rico can't pay its debts and wonders where that cramped little handbasket came from:
http://www.latinorebels.com/2012/11/07/luis-fortuno-loses-and-puerto-rico-wins/
How did an economy that was lauded in 2012 (under the management of a Republican governor) turn into a total disaster by 2015 (under the management of a Democrat governor)? That is one amazing turnaround in double quick time, in the wrong direction, and with the worst possible result. I hadn't realized that even a Democrat could deliver wrack and ruin that quickly. There must be more to this story of rapid decline than we are hearing. Note the bitter comment at the end of the conservativereport article linked above. The comment was written in Jan 2013 and describes the sharp contrast in policies between the two governors.
At this time, Fortuno is practicing law in a DC firm. I had hoped, based on admittedly little knowledge of his term in Puerto Rico, that we would be seeing a great deal more of him. Was his term of office not as productive and successful as we had been lead to believe?
Also, were Puerto Rico to become independent, who is to say it will not take a drastic turn to the Left, and end up saddled with a government of looters and aid junkies--to be followed by masses of its people trying to get to the USA without benefit of citizenship?
ReplyDeleteThe aid junkie scenario is one that could easily happen--given that China would dearly love to knock the USA off its perch. The long Cold War between Beijing and Taibei was marked by aid competition--which prior to the takeoff of the Mainland's economy was probably a reason why Taiwan remained in the UN as long as it did. Further, the aird competition between the two Chinas probably helped fuel the Solomon Islands' civil war.
I was being sarcastic. PR will never go the independence route. Its ruling class gets way too much from the current situation.
DeleteOK. I know there are lots of people with a keen sense of irony; and I was pretty sure you were exercising it when speaking of PR inddependence. And, as a Spanish-speaker, you probably have a much better sense of the pulse of PR than I. I am also very much aware that even ordinary Puerto Ricans understand that US citizenship is a very valuable asset for anyone--at least for now.
DeleteBTW, when I was handling Orderly Departure Cases out of Saigon--oops, Ho chi Minh City--while stationed in Bangkok, several of the INS officials I worked with were Puerto RIcan, and they were a lot more conscientious and hard-nosed about their business than their superiors.
But I also sense we're entering an era in which politics will trump economic interest; and we could see a lot of separatist ferment going on. I sensed that very much when talking with Uighur migrants in Guangzhou and people who knew their home region about how the collapse of the Soviet Union impacted Xinjiang. What the ethnic violence and Islamic militancy in Sharki Turkistan (Xinjiang) represents is that the locals out there understand that Big Brother is mortal, not that they're better off under an expanding Chinese economy. We might see more of the same in disaffected and marginal regions worldwide in the not too distant future.
2+2=4 is showing up in a lot of places, much to the consternation of liberal/progressive politicians/economist everywhere.
ReplyDeleteJames the Lesser
Many people assume that the destruction of the economy of a country, such as is happening Greece or Puerto Rico, is an unfortunate and unintended consequence of socialist/communist government. There can be an argument made that it is an intentional part of bringing down the capitalist system by making sure that the population rises up in revolt when their Cloward-Piven strategy succeeds and the country runs out of "other people's money". This dissatisfied population will then demand a Marxist revolution, where the government will be forced to continue to subsidise people as they do now, with the expectation that this will be paid for by The Rich by crippling progressive taxes and seizing of assets deemed to be gained from the 'exploitation of the poor'.
ReplyDeleteBy allowing Greece to fall into civil disorder, the Marxists believe that this will both discredit Capitalism and also provide a pool of revolutionaries who will demand a communist state who will confiscate and allocate all resources 'fairly'.
The unwillingness of the EU countries to prevent the huge influx of poor, uneducated migrants from Africa seems to be an indication that that indeed is a policy to create a permanent underclass of potential revolutionaries whose dependance on the state and hatred for the existing political system are both undeniable.
Well, by all means let them jump into the historic cesspool of Marxist economies. In a decade or 2 their children will figure it out and create the change for a true market reform economy...or not. Either way we should leave them to wallow in their own pit while we concentrate on getting rid of our own batch of 60s hippy radicals and get our economic house in order.
DeleteSaid it a billion times... still true... the EU is nothing more than a large Home Owners Association. People will fuss and cry, but the stakes are much lower than they make it out to be. The money has already been lost.
ReplyDeleteBringing PR into the fold would likewise take a lot of money. I don't know the political ramifications, but I'm also pretty certain neither of our major political parties knows either, or someone would be pushing for it fiercely. Wrap PR and American Samoa into our 52'nd state (after our 51'st state, the "State of Jefferson", which I didn't know about until just this week!)
- reader #1482, back from a long vacation only to see scotus hand us over to tyranny.
I was born, raised, and lived in PR for the first 19 years of my life, and have watched PR's politics all my life.
ReplyDeleteI am convinced that it is not in the current governor Alejandro García Padilla’s interest to improve the economy; indeed a case can be made of the opposite. (With apologies for the shameless self-promotion) I posted on it yesterday http://faustasblog.com/2015/07/puerto-rico-a-few-thoughts-on-the-economic-crisis/
Good piece you have there. Thank you.
DeleteYou say Greece and Puerto Rico "must" do these things, but it seems that they don't have to do that at all, so long as they are willing to play brinkmanship with their respective ATMs. As long as the Germans are more frightened at the prospect of the end of the Euro than they are of shoveling wheelbarrows full of Euros to the Greeks, the Greeks can continue as they have been. It seems the Germans are standing firmer this time, but who do you think will blink first?
ReplyDeleteSame for the Puerto Ricans.
Mark in Portland
germany has probably already written off the debt or performed some highly leveraged bet against it ever being repaid.... probably AIG took that bet (they never met a bet they didn't blindly accept, I think)... so the US taxpayers will probably end up footing the greek bailout? :)
Delete- reader #1482.
I would love to hear the Diplomad's views on independence for the Kurds as suggested in this blog post:
ReplyDeletehttp://www.americanthinker.com/articles/2015/07/kurdistan_model_for_islamic_reform.html
I think that supporting an independent Kurdistan would be a very sensible policy. It would stick it to several regional players - Iran, Turkey, ISIS and Iraq. And it would create an ally slap-bang in the middle.
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