A recipe for disaster

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Greece, long the poster child for Western nations spending themselves to the brink of oblivion, must now move over – for Italy, which could be an even bigger problem if it isn’t careful.

Experts say Italy is now in danger of being consumed by its debt – and being the third-largest European economy and eighth in the world, it is said to be too unwieldy to be bailed out, particularly by a roiling Europe that’s dealing with unsustainable debt levels in Greece, Spain, Portugal and Ireland.

Like Greece, Italy is soon to lose its prime minister, Silvio Berlusconi, to the debt crisis. In coming weeks, Italian leaders will be trying to walk the same tightrope Greece’s leaders have: to institute austerity measures sufficient enough to keep the nation afloat and creditors at bay, but not so harsh that they set the nation aflame with citizen anger.

Skittish investors will tell the tale – and that, too, is unsettling, as many of Italy’s biggest are in France and Germany. That means the contagion could spread to France, while dampening Germany’s ability and eagerness to come to the rescue.

What’s going on? Perhaps nothing has summed it up as plainly and understandably as a Wall Street Journal editorial Wednesday titled “Europe’s entitlement reckoning: From Greece to Italy to France, the welfare state is in crisis.”

“In Italy, as in Greece, Spain and Portugal and eventually France, the welfare-entitlement state has hit a wall,” the newspaper writes. “Successive governments on the Continent, right and left, have financed generous entitlements with high taxes and towering piles of debt. Their economies have failed to grow fast enough to keep up, and last year the money started to run out. The reckoning has arrived.”

A recent Washington Post story on the troubles in Greece also inadvertently helped shine a light on Europe’s core problem – by quoting “a retired freelance journalist who was sitting at a market in the working-class Athens neighborhood of Psiri.”

She’s 58 years old.

Even the Chinese get it. One official was quoted recently, “If you look at the troubles which happened in European countries, this is purely because of the accumulated troubles of the worn-out welfare society. I think the labor laws are outdated. The labor laws induce sloth, indolence, rather than hard working. The incentive system is totally out of whack.

“Why should, for instance, within the Eurozone, some members’ people have to work to 65, even longer, whereas in some other countries they are happily retiring at 55, languishing on the beach? This is unfair.”

He’s right, but doesn’t go far enough. It’s a recipe for disaster.

And the entire world could get caught up in it.

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Riverman1
78408
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Riverman1 11/12/11 - 05:58 am
0
0
Every now and then in life

Every now and then in life you feel like screaming, I told you so. How long have conservatives warned about the dangers of borrowing and giving away money to keep the standard of living for even those who are not productive at unrealistically high levels?

When those who work harder, are smarter or just plain gamble and win are not rewarded while those who don’t work hard are made to feel comfortable through misplaced altruism, economic disaster results. You can only burn the trailer steps for firewood once.

seenitB4
79393
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seenitB4 11/12/11 - 07:02 am
0
0
It wouldn't be so tough to go

It wouldn't be so tough to go back to the 50s way of life..heheheh..some would get in shape---cut the firewood-grow the veggies--do your own yard work---cut out the fluff food----get healthy again----& stop the tv sofa time---hunt for meat (deer-rabbits)
That might happen & many of us can handle it!! Yeehaw.

Fundamental_Arminian
1833
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Fundamental_Arminian 11/12/11 - 08:01 am
0
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Let's hope our politicians

Let's hope our politicians don't try to make us the bail-out nation for the world. Europe's problems should stay overseas, and we should change our ways before we go the way of Greece and Italy.

DuhJudge
206
Points
DuhJudge 11/12/11 - 09:12 am
0
0
Bad economics will eventually

Bad economics will eventually be resolved again by war and Dark Ages. Need surpasses desire as things get desperate. Better get prepared.

robaroo
661
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robaroo 11/12/11 - 09:42 am
0
0
You might want to hold off on

You might want to hold off on praising the "conservatives" for warning about the coming debt crisis. They pushed for tax cuts before spending cuts for decades. That makes the Republicans just as guilty as the Democrats.

Carleton Duvall
6305
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Carleton Duvall 11/12/11 - 09:45 am
0
0
Socialism has not worked in

Socialism has not worked in Europe but we still have many in this country that think that it will work here including our POTUS.

augusta citizen
8484
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augusta citizen 11/12/11 - 10:15 am
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Riverman, I find myself

Riverman, I find myself wanting to scream, "I told you so" all the time, but nobody would pay attention anyway. What intelligent person could really believe that borrowing money to provide entitlements is sustainable?

seenitB4, so true! Already started getting back to some of those basics myself, it seems foolish not to!

DuhJudge, I believe you're right on target there.

If we don't get our spending under control, and entitlements reined in, we'll all be hurtin' for certain.

Guess they're called the PIIGS countries because their greed is becoming their undoing.

harley_52
21747
Points
harley_52 11/12/11 - 10:33 am
0
0
It seems like only yesterday

It seems like only yesterday that liberals were touting the success of European countries in their dabbling with socialism. Short work weeks, Long vacations, socialized medicine, and the like were "working quite well for Europe" we were being told whenever we Conservatives complained about the massive government spending and debt being run up by the Obama Administration.

In the words of Obama's formerly biggest moral and ethical advisor, "the chickens are coming home to roost."

I'm happy to see ACES used the Aljazeera article I posted in here the other day to provide China's view of the situation in Europe. It's a good one. China sees what's coming. They've seen it for a good while. And while they've been wildly successful modernizing their economy over the past couple of decades they haven't let a desire for utopia cloud their eyes as have the politicians in Europe and in the USA. It's a lesson that remains lost on the liberals, but not for much longer.

There is no free lunch.

bjphysics
36
Points
bjphysics 11/12/11 - 10:51 am
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What percentage of GDP does

What percentage of GDP does China spend on social programs?

harley_52
21747
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harley_52 11/12/11 - 10:54 am
0
0
What percentage of GDP does

What percentage of GDP does China spend on defense programs?

bjphysics
36
Points
bjphysics 11/12/11 - 10:57 am
0
0
“BEIJING -- The Chinese

“BEIJING -- The Chinese government pledged on Thursday to increase spending on social programs including pension and medical reform in 2009 despite pressure from the international financial crisis.

‘The more difficulties we face, the greater attention we should pay to ensuring people's well-being and promoting social harmony and stability,’ Premier Wen Jiabao said in a government work report to the annual session of the parliament that opened here Thursday.

The central government plans to spend 293 billion yuan (about $42.84 billion) on the social safety net this year, up 17.6 percent or 43.9 billion yuan over the estimated figure for last year, he said.

‘Local governments will also increase funding in this area,’ he said.

The fund will help ‘expand coverage of social security programs’ and ‘increase social security benefits’ of the Chinese, according to the Premier.

The government will allocate an additional 850 billion yuan in the three years beginning on 2009, including 331.8 billion yuan from the central government, to ensure smooth progress in the reform of its medical and health care system.”

http://www.chinadaily.com.cn/china/2009-03/05/content_7542377.htm

bjphysics
36
Points
bjphysics 11/12/11 - 11:00 am
0
0
harley_52: “…they haven't let

harley_52: “…they haven't let a desire for utopia cloud their eyes…”

What does that mean?

Carleton Duvall
6305
Points
Carleton Duvall 11/12/11 - 11:03 am
0
0
What percentage of GDP does

What percentage of GDP does China spend on social programs? I looked it up. It seems that 6% is the answer. Seems low.

harley_52
21747
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harley_52 11/12/11 - 11:06 am
0
0
It means there's no free

It means there's no free lunch.

What about those defense programs?

harley_52
21747
Points
harley_52 11/12/11 - 11:07 am
0
0
Scoobydoisback said "What

Scoobydoisback said "What percentage of GDP does China spend on social programs? I looked it up. It seems that 6% is the answer. Seems low."

Where did you look it up?

bjphysics
36
Points
bjphysics 11/12/11 - 11:10 am
0
0
harley_52: “What percentage

harley_52: “What percentage of GDP does China spend on defense programs?”

China says 1.4%, SIPRI estimate is 1.8%, RAND estimate is 1.9-2.4%, official DoD is 1.2%.

U.S. is at 3.6-4.0%

Carleton Duvall
6305
Points
Carleton Duvall 11/12/11 - 11:10 am
0
0
I googled for it.

I googled for it.

harley_52
21747
Points
harley_52 11/12/11 - 11:12 am
0
0
What does SIPRI, RAND, and

What does SIPRI, RAND, and official DoD estimate China's social program spending to be?

harley_52
21747
Points
harley_52 11/12/11 - 11:14 am
0
0
scoobydoisback said "I

scoobydoisback said "I googled for it."

Do you know the source of the data?

bjphysics
36
Points
bjphysics 11/12/11 - 11:24 am
0
0
harley_52: “What does SIPRI,

harley_52: “What does SIPRI, RAND, and official DoD estimate China's social program spending to be?”

The article name is: “Military budget of the People's Republic of China” and cites these three organizations. No welfare spending data in article. Cited sources are:

SIPRI: Defenselink^mil/pubs/pdfs/070523-China-Military-Power-final ^ pdf

RAND: rand^org/hot_topics/china/

DoD: Office of the Secretary of Defense - Annual Report to Congress: Military Power of the People's Republic of China 2010

bjphysics
36
Points
bjphysics 11/12/11 - 11:30 am
0
0
Article on China social

Article on China social spending:

***
China to boost spending on welfare, education, health care

BEIJING -- The Chinese government pledged on Thursday to increase spending on social programs including pension and medical reform in 2009 despite pressure from the international financial crisis.

"The more difficulties we face, the greater attention we should pay to ensuring people's well-being and promoting social harmony and stability," Premier Wen Jiabao said in a government work report to the annual session of the parliament that opened here Thursday.

The central government plans to spend 293 billion yuan (about $42.84 billion) on the social safety net this year, up 17.6 percent or 43.9 billion yuan over the estimated figure for last year, he said.

"Local governments will also increase funding in this area," he said.

The fund will help "expand coverage of social security programs" and "increase social security benefits" of the Chinese, according to the Premier.

The government will allocate an additional 850 billion yuan in the three years beginning on 2009, including 331.8 billion yuan from the central government, to ensure smooth progress in the reform of its medical and health care system.

***

Keyword search: China Daily, “China to boost spending on welfare, education, health care”

Trying to avoid links because they (currently) send posts to review limbo.

bjphysics
36
Points
bjphysics 11/12/11 - 11:33 am
0
0
Tried two posts on China

Tried two posts on China social spending (up 17.6% in 2009) but they keep going to approval limbo, even without links.

harley_52
21747
Points
harley_52 11/12/11 - 11:33 am
0
0
Bj and scoobydoo, the true

Bj and scoobydoo, the true answer to the questions is "we don't know." Regardless what it published somewhere, the data originates with China and may, or may not be, adjusted by some other agency to make it look like they're adding some fine touches. With regard to China's Defense spending, BJ should know what's published has no relationship to the truth (which none of us know).

Carleton Duvall
6305
Points
Carleton Duvall 11/12/11 - 11:34 am
0
0
harley_52
21747
Points
harley_52 11/12/11 - 11:35 am
0
0
So, BJ, back to your original

So, BJ, back to your original question......China's social spending. The answer is "I don't know and neither do you."

bjphysics
36
Points
bjphysics 11/12/11 - 11:37 am
0
0
Naturally, we need to keep in

Naturally, we need to keep in mind that our aircraft carriers cost $5 billion but China's cost four-thousand sixty-eight dollars and seventy-nine cents.

And thats fully loaded.

bjphysics
36
Points
bjphysics 11/12/11 - 11:40 am
0
0
Selective epistemological

Selective epistemological nihilism?

harley_52
21747
Points
harley_52 11/12/11 - 11:41 am
0
0
Thanks, Scooby, I see it's an

Thanks, Scooby, I see it's an IMF document. Often that's all we have, but I don't place much confidence in the data because these organizations such as the IMF, the World Bank, and the United Nations aren't known for their unbiased accuracy in reporting.

harley_52
21747
Points
harley_52 11/12/11 - 11:46 am
0
0
bjphysics said "Selective

bjphysics said "Selective epistemological nihilism?"

Yes. But I think the point you wanted to make was that China didn't spend as much on social programs as Europe. I'll agree it's most likely true.

How much should they spend?

bjphysics
36
Points
bjphysics 11/12/11 - 11:48 am
0
0
Available data indicates

Available data indicates China is increasing all its spending but they aren’t spending money they don’t have; from the Three Gorges Dam, to aircraft carriers, to social security, to medical modernization. The economics of all this (Italy, Greece, U.S., etc.) is not about the ideology of being for or against government spending (that’s a separate issue), be it defense or welfare. It’s about spending money a nation does not have. Norway has no problem with their spending because they are flush with oil and low in population.

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