by Ken Vincent, Columnist & Featured Contributor
[su_dropcap style=”flat”]I[/su_dropcap]T’S ALL THE FAULT of the evil lenders that demand their money back. That is the story line offered up by the liberal leftists. It is the same whether explaining why the housing market crashed in the US, or why Detroit is a ghost town, or why Greece is in serious trouble.
Some years ago the liberals controlling the US government said that everyone should be able to partake of the “American Dream” by owning a house, a car, a big screen TV, and have some credit cards. So, lenders were required to make what came to be known a “sub-prime” loans. Well, predictably, those loans turned sour and when banks demanded their money or the house the liberals yelled that it was all the fault of the greedy lenders for loading all that debt on those poor people that couldn’t pay. Before the banks made those bad loans they were accused of discrimination by not lending to low income borrowers. Now that they wanted the debts to be paid they were discriminating by demanding money from people that couldn’t pay.
Now, let us step this up to the national level. The liberal government in Greece, and other countries, have for years been living beyond their means. Promising retirement, health care, housing, education, food and other programs that they couldn’t pay for. To complicate the issue they formed more and more agencies and hired more and more people to administer these programs. To support all that they borrowed money. Lots of money. Now the bond holders (lenders) want their money back and Greece can’t pay. So the call again goes out that the lenders are to blame for lending more money than the borrower can reasonably be expected to pay and should write down, or write off that debt.
Now, who loaded up all that debt on Greece, Spain, Italy, Puerto Rico, and Detroit? Did lenders put a gun to government’s head and force them to issue bonds? Were those government “leaders” tricked into thinking that the debt would never come due? No, of course not. The theory was that the debt could be paid back by spreading the cost. Higher taxes on companies and high income individuals. Take from the rich and give to the poor. Make everyone even. Well, that theory has never worked and obviously it still doesn’t.
There are some common factors in all the cases. Those include:
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- Government promises to take care of everyone from cradle to grave;
- Increasing and expanding those promises to get votes;
- Union deals that are not economically prudent, but agreed to as a way to garner union votes;
- More than 10% of the working population works for the government;
- The debt to GDP ratio has topped 100% (though in the case of P.R. it is only 70%); and
- People and employers are forced to move out of the venue to try to protect themselves from the increasing burden of taxes and regulations.[/message]
People have been moving out of cities and into the suburbs for years in the US to avoid the higher taxes in the cities. Many cities passed a tax on working in the city if you didn’t live there. People have also been moving out of Greece, the US and other countries in increasing numbers. However, in some cases that is somewhat hidden by the number of illegals and Arabic peoples moving in. Companies have also fled in an effort to protect their investors from the increasing taxes and regulations. Detroit’s population has fallen from 1.85 million to under 700,000. There are now more Puerto Ricans living off the island than on it. The same trend is present in NYC, London, and California.
Under Obama/Reed/Polosi the US has borrowed to the level that many are saying is simply not sustainable. The us credit has been downgraded once and it is reasonable to expect that it will be further downgraded.
So one has to ask, what is the real purpose of borrowing to a level beyond the ability to pay? Is it really to take care of the underprivileged? Is it really to support the disadvantaged? Of course not. It is all about staying in power. It is all about increasing power. That is hidden by the mass of those on government subsidies of some sort denouncing the lenders and the institutions that laundered the sub-prime debt. It is all a part of the game you see. Yes, the Wall Street companies knew what they were doing and yes they knew that they would take the heat when it all exploded. But, they make a lot of money sucking up to the liberals and it is all a part of the power game.
Of course in the US it isn’t just Detroit. They just happen to be one of the early extreme examples. However, California and numerous other states and cities are now in that vortex of debt and promises beyond the ability to pay. Gov. Walker is trying in his state by forcing union contract roll backs. The governor of NJ has refused to pay $1.4 billion in pension contributions that the state can not cover. Many states and cities have pension plans that are grossly under funded and have no ability to fill in the gap.
Greece is experiencing tough push back from the population as they try to force austerity. We can expect the same in the US if elected officials ever try to get our spending and borrowing under control.
Some suggested reading:
Articles written by Daniel Greenfield, a Shillman Journalism Fellow at the Freedom Center.