What do the United States and Greece and Puerto Rico have in common?
Their governments all spend way more than they take in.
But the U.S. gets away with it because it is too big to fail and people all over the world recognize the American dollar as, well good as gold, except you cannot exchange it for that and we are no longer on the gold standard.
I have not been following the Greek debt crisis story closely, but then it is not all Greek to me either.
Now that I’ve got that pun out of the way I make this observation:
Both Greece and Puerto Rico apparently have been operating for years by spending way over what they take in but the politicians have kept that hidden from the populace — to some degree at least. But finally it has gotten to the point where something had to give.
The big story right now is in Greece where the polls just closed, as I write this, on a referendum supposedly over whether the nation should succumb to more austerity measures as dictated by the rest of the European Union, and most notably by the big boy on the block Germany, or whether they should turn their backs on the EU or at least its demands.
Actually, because the last EU offer on a program to deal with the crisis has passed a deadline this past week, as I understand it, whether the Greek voters vote no or yes makes little difference except as a statement of attitude. All reports are that the no votes are outnumbering the yes votes; the voters are in a defiant mood. Their pride is hurt and they may feel they have nothing to lose, that is that it cannot get worse than it already is. Pensioners lined up at the banks to withdraw their money and if they got any it was only a fraction owed to them.
Shopkeepers stand out in front of their businesses in Puerto Rico and wait for customers. Few people have money. People are leaving the place for the mainland U.S. in droves.
And whose fault is all of this? Well of course the blame rightly is put upon or should be put upon the governmental leaders who are either to profligate in their spending or who are too timid to admit to the voters that there is no money.
But really it’s also the people themselves. They want much from their governments: roads, health services, clean water, support of agriculture to keep the groceries coming, police and military to keep them safe, safety net protection to be there when they lose their jobs or become disabled, disaster relief and so on. But it is difficult to get into office or stay in office if the people feel they will be or are over taxed.
In short, people always want things but at the same time are reluctant to pay the full price. There is always the old rationalization for that reluctance: “if they would just spend more wisely and cut out all of the wasteful items in the budget”.
Budgeting is difficult, whether for an individual or household or for a government. But it must be done and must be done honestly but in these cases it has not been don so.
And that is the problem.