On reflection, it is appropriate that the fiscal crisis of the west has begun in Greece, the birthplace of western civilization. Soon it will cross the channel to Britain. But the key question is when that crisis will reach the last bastion of western power, on the other side of the Atlantic.
The IMF recently published estimates of the fiscal adjustments developed economies would need to make to restore fiscal stability over the decade ahead. Worst were Japan and the UK (a fiscal tightening of 13 per cent of GDP). Then came Ireland, Spain and Greece (9 per cent). And in sixth place? Step forward America, which would need to tighten fiscal policy by 8.8 per cent of GDP to satisfy the IMF.
It just means they default on the loans. The creditors only get what the country chooses to give them (if anything), which is usually negotiated with some eye towards balancing the country's interests against the harm to their future ability to get loans if they screw the creditors too much. See: http://en.wikipedia.org/wiki/Default_(finance)#Sovereign_def...
Yeah, from that definition of bankruptcy it's a poor choice of words, because sovereign countries can't go bankrupt in the sense that bankruptcy law means. They're colloquially bankrupt in the sense of "not able to pay their bills", but not legally in the sense of "in court-supervised receivership"--- because there is no world government, and therefore no bankruptcy court with jurisdiction.
Interesting idea though for a small country like Tuvavlu - just sell the country to the highest bidder. If say an online gambling company wants to be sure of favorable treatment it could just buy the government wholesale instead of having to buy it one politician at a time.
It's only what say Lichtenstein, the channel islands, Bermuda have de-facto done.
I'm not a libertarian, to say the least, but I think that this writer has a point. I don't know where the saying originates that "a democracy only survives until its citizens realize that they can vote themselves money" -- I believe it was a British historian writing about Athens in the 1750s -- but it's intensely relevant here. Greece, or any country, can only support a large public sector (apparently not overpaid so much as overpopulated) on the back of a large productive sector -- not necessarily a private sector (just ask the People's Liberation Army and its subsidiaries), but something or other that's generating wealth.
I'd also emphasize _delerium's passing comment about a state needing to worry about its future ability to get loans. The combination of the Industrial Revolution and pogrom-proof banking have made this less likely, but as late as the 18th century there was always the possibility of a country running out of money; Philip II's bankruptcy is a particularly famous one. If that (or extreme inflation) starts happening again, it will make everyone's lives harder.
The article keeps talking about how civil servants are overpaid, which I don't think is true. There are too many of them, but they aren't particularly well paid; the average is around €20,000.
In America many civil servants are overpaid when you look at total compensation. The amount of retirement that needs to be paid is ridiculous and most govs didn't actually set aside money to pay it.
That I agree with, but it's a more general issue about the temptation to make future promises you can't pay for, and is also true in the private sector. Employers in general, public and private, make promises of future payments they can't pay for, don't set aside the money, and just kick the can down the road to the next generation of management. It's one reason so many American companies go bankrupt about 30-40 years after their peak, which coincidentally is when their pension obligations start coming due.
> That I agree with, but it's a more general issue about the temptation to make future promises you can't pay for, and is also true in the private sector.
There's an important difference. If IBM can't pay the pensions that it promised, IBM pensioners take the hit. If San Jose can't pay the pensions that it promised, I take the hit via taxes.
Isn't that actually worse? Not only can IBM screw its pensioners, but the pensioners have no recourse: IBM's shareholders get to keep decades of profits gotten on the basis of promises that were later breached, and limited liability means those dividends can't be clawed back to pay the company's obligations.
> Have you heard of the Pension Benefit Guarantee Corporation?
Yes, I have. It's largely funded by companies that offer pensions - it's a huge problem that it isn't completely funded that way. That's not an argument for increasing its taxpayer funding.
Also, the first thing that it does is cut pension benefits.
I'm the only one who is going to pay for my retirement, so I've little sympathy for folks who think that I should pay for theirs.
If you're in a giving mood, feel free to kick in some money for me. If you're not willing to do that, what's the argument that I should pay for someone else's?
Your comment lacked substance, that is why I flagged it. The article itself was not propaganda, right-wing or otherwise. Calling people wingnuts does not contribute to the conversation.
I suppose the ideal would be not to have such articles posted at all, since this isn't really the place for this sort of hyper-partisan stuff, whether from Cato or the Socialist Worker.
The content of the article should be evaluated on its own merits, whatever your opinion of the source. Even the most partisan individual can make a good argument.
It simply is not hacker news, though, unless people want to turn this into some sort of political debate site, which would be very, very easy. It's way easier to find articles about politics and economics than it is to find good articles about hacking and startups, and they're far 'stickier' in terms of drawing people into lengthly, pointless discussions that end up in flame wars. As this thread demonstrates quite well.
On reflection, it is appropriate that the fiscal crisis of the west has begun in Greece, the birthplace of western civilization. Soon it will cross the channel to Britain. But the key question is when that crisis will reach the last bastion of western power, on the other side of the Atlantic.
The IMF recently published estimates of the fiscal adjustments developed economies would need to make to restore fiscal stability over the decade ahead. Worst were Japan and the UK (a fiscal tightening of 13 per cent of GDP). Then came Ireland, Spain and Greece (9 per cent). And in sixth place? Step forward America, which would need to tighten fiscal policy by 8.8 per cent of GDP to satisfy the IMF.