Friday, May 7, 2010

The Parallels Between Greece And US Debt Problems

Matthew Buckley from The Street describes the parallels between the drastic situation in Greece and the government debt situation in the United States. Despite high debt levels, government officials are unlikely to start making necessary cuts that would lessen future debt problems. See the following article from The Street.

I watch in amazement with each passing day the incredible events unfolding overseas in Greece and wonder how old I'll be when the same thing happens here. Something tells me it will be sooner rather than later.

Uncontrolled government spending, federal and unionized employees refusing to cut their bloated salaries and benefits, a public angry at their lawmakers for allowing the situation to happen, and a currency not worth the paper it's printed on. Welcome to the new United States.

The main reason this administration is ramming through its radical agenda at all costs is because it knows how hard it is to repeal or cut something that grows into an entitlement. Somehow health care became a "right." Apparently the founding fathers in their haste forget to add this when they pulled their all-nighter.

Politicians are forbidden to mention the words "Social Security" for fear of an angry mob of senior citizens showing up in their office or providing ammo to a political opponent. Welfare reform? You're obviously a racist.

So enjoy the ride as lawmakers ram through cap and trade, financial reform, and some sort of immigration "reform" even though all of these will add to the bloated deficit and government. This all happening after taking over the auto industry and federalizing the student loan industry.

Our politicians can do this because they divert our attention with kangaroo courts and show trials. The administration is adept at using their populist rage cannons at whoever runs afoul of its master plan.

It's incredible how quickly the Senate can drag Goldman Sachs(GS) executives and traders in front of a committee to be grilled by lawmakers who never had to make payroll or have held a "real job."

When will we the people get to sit up there and grill Barney Frank, Maxine Waters, and Chuck Schumer for their roles in creating the monsters Fannie Mae(FNM) and Freddie Mac(FRE)? Who holds these people accountable? Certainly not the voters in their districts and states.

For years these three lawmakers blocked reform and pushed the entities to make loans to low income individuals who couldn't afford the homes. These lawmakers labeled Republicans "racist" for daring to question Fannie CEO Franklin Raines' leadership even at the height of an accounting scandal.

The government tried to recover more than $90 million in bonus payments to Raines in a civil suit filed in 2006. In 2008 Raines settled for less than 10% of the amount in question. Shocker: $90 million could've kept a lot of people in their homes.

We're already seeing Greece-like problems in California. The state will either go bankrupt or need to be bailed out by the federal government. And the $140 billion Greek bailout proposed by the IMF should leave a bad taste in your mouth as well. Guess who the largest IMF shareholder is? You guessed it.

Firing Line: One day the bill for all the checks we're writing will come due and the people will not be happy about it. We can prevent this day from happening if our lawmakers stand up now and make the tough choices to prevent this train wreck from occurring. I won't hold my breath. I'm too busy watching TV and our lawmakers yelling at all the bad people.

This post has been republished from The Street, an investment news and analysis site.

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