Greece stopped working to produce wealth (de-industrialized) and then continuously borrowed money (actually they printed new paper Bonds and sold them, emulating the USA economic policy) instead of raising taxes that they needed to pay for their government expenditures. They increased their bureaucrat payrolls, state and local payrolls, and put as many people into tax supported jobs as possible (to buy political votes). Now they cannot repay the money that they borrowed.
The Greeks will now have to drastically reduce all of their government expenses at all levels, and maybe also re-industrialize to create an income flow of wealth through exports to pay off their Greek bonds. Greece needs to emulate the third world nations that have industrialized in the past couple of decades in order for Greece to accumulate wealth in addition to the Greek tourism.
I do not know why economists refer to or compare national (sovereign) debt as a percentage of Gross National Product. This GNP has nothing to do with the ability of a nation to repay their national debt. What if the majority of the GNP activity was government tax funded bureaucrat payrolls, state and local tax funded bureaucrat payrolls, unemployment benefits, welfare, retirement pensions, providing free medical, housing, social services and other tax funded bureaucrat jobs that do not produce any national wealth that the nation could use to repay national (sovereign) debt?
Gerald R. Spencer, P.E., President
Spencer Engineers, Inc.
Houston, Texas
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Posted May 9, 2010 at 3:00 pm, in Free Speech Zone
June 6th, 2012 at 6:36 am
[...] Finally, the advantages of a stimulus that simply puts service workers to work rather than reindustrializing is overrated by the Keynesians. It certainly is better to pay for a teacher’s salary rather than having that teacher collect unemployment. The teacher can do something productive, rather than sit at home sending out resumes to jobs where hundreds are chasing the same position. The teacher’s presence in theory guarantees a higher teacher to student ratio, raising the productivity of the future student/worker. Yet, some jobs are more or less productive in providing the ability to produce the wealth and tax revenues which pay for even more teachers’ salaries. [...]