The hobbling of Hephaestus

Whatever help the IMF provides, after three years (the period of debt refinancing) Greece will still be at a debt-to-GDP ratio between 140 percent and 150 percent. As Jacob Kirkegaard of the Peterson Institute for International Economics noted in our interview last weekend, they’re just delaying the inevitable.

But wait. We’re repeatedly told government spending is the answer to our fiscal woes, whether in stimulus, job creation bills or whatever. Next time you hear it, remember the Pan-Hellenic Socialist Movement (better known as PASOK) is the dominant party in Greek Parliament. For the majority of their time in power, social spending, tax increases and artificial wage inflation were priorities (sound familiar?). We are now seeing the end result. No, imploding Greece is not the United States, but continue in the current direction, and we soon could be.