Yesterday was a bad day. Headed out to Pleasant Valley at about 2:30, I turned on my car radio crossing Broadway on Mankato Avenue. A reporter was broadcasting live from the New York Stock Exchange, saying the market was down 350 points, but “there was no panic.” By the time I passed the Bridges Golf Course, it was down 1,000, and there was panic in my car, if nowhere else. Here we go again, I thought.
Fortunately the Dow quickly regained all but the original 350 points or so, but that still qualifies as a very, very bad day. The stock market is jittery about the situation with the European Union, where Greek government debt has been downgraded to near-junk bond status and, without a massive financial bailout from the more solvent members, like Germany and France, may default on its debt.
Why do we care, one asks? Well, if Greece defaults, then it becomes likely that some or all of the remaining European PIIGS (Portugal, Ireland, Italy, and Spain) will default, swamping European banks and markets, and sending a tsunami through the rest of the world’s financial institutions that will make the events associated with our Great Recession seem a mere ripple. You may not like it, but we are all in this together.
These countries did for years what America is doing now, spending far in excess of their incomes on entitlements, and particularly their public employee unions, which in Greece, one reads, have enabled members to retire at age 53, with 80% of their hefty salaries guaranteed. The money is not there, and before other EU members will come forth with a bailout, the Greek government is being forced to cut expenses, mostly in the way of employment, wages, and benefits to its public employees, drastically. They are now on the streets, a howling mob wreaking mayhem which managed to burn up three working people in a bank they fire-bombed, some of the rich people, no doubt, whom the “protesters” want to foot the bill to maintain the status quo.
Greece is small enough that its collapse could be absorbed, but Spain is the fifth largest economy in Europe, and along with the others, would bring down the EU like a line of dominoes, with catastrophic consequences all over the world. The Spanish knuckled under to Islamic terrorism when the Madrid subway system was bombed, electing a socialist government which skedaddled promptly from its commitment in Iraq. The Spaniards got more than they bargained for, however, when their government sank vast sums into the subsidization of renewable energy, creating a host of new green jobs, each of which, unfortunately, cost 2.2 existing ones in other industries (this according to a study done at King Juan Carlos University in Madrid). Sound familiar? Spanish unemployment stands at 20%. Perhaps they’ll raise taxes.
Back to yesterday’s bad news. There was more of it in addition to the market dropping, as Minnesota’s Supreme Court ruled that Governor Pawlenty had no right to unallot funds enabling the underprivileged but deserving poor to buy nutritional supplements.
The argument is more complicated, but it is fair to say on a broader level that by the court’s ruling, all entitlements are sacrosanct, never to be trimmed or reversed. It represents the determination of leftist thinking that the spigot of state spending can only be ratcheted farther open, never backed off in the slightest. When government can not meet its obligations, the solution is simple – raise taxes.
How many years do you suppose we are behind Europe?