€urosclerosis: The Greeks are revolting

From CNN:

Greeks set election date amid possibility of bank panic

From Antonia Mortensen and Matthew Chance, CNN | May 16, 2012 — Updated 1212 GMT (2012 HKT)

Athens, Greece (CNN) — Greece will hold new elections on June 17, state media reported Wednesday, after Greeks pulled hundreds of millions of euros out the banking system amid fears that the country will not be able to stay in the European Union’s single currency.

Setting the date for a new vote comes 10 days after a national election where voters punished the major parties for harsh budget cuts, leaving no party able to form a government.

A caretaker administration led by a senior judge will run the country until the new vote.

The interim prime minister, Panagiotis Pikrammenos, will go to the office of President Karolos Papoulias to receive his official instructions Wednesday, Greek state television reported.

More at the link. Chancellor Angela Merkel of Germany stated that she regretted the suffering through which the Greek people must go, but the austerity measures, though harsh and unpopular, were nevertheless necessary.

We at THE FIRST STREET JOURNAL have frequently quoted Margaret Thatcher’s famous dictum that “The trouble with Socialism is that eventually you run out of other people’s money.”1 That is what has happened to Greece, and that is what has happened to Italy. Chancellor Merkel tried to save the Greeks, because she knew that a Greek default would have continent-wide repercussions, and that Germans would be hurt by the damage done to the euro, the common currency. Her own people have suffered a bit — though certainly not as much as the Greeks — due to the Chancellor’s attempts to save the Greeks from the consequences of the folly of socialism; now it is starting to look as though all the German sacrifice was simply to delay the inevitable. the German voters may have lost patience with the Chancellor:

German state election deals blow to Angela Merkel’s party

Voters in North Rhine-Westphalia give opposition parties enough support to form a governing coalition. The chancellor’s Christian Democrats receive about 26%.
May 14, 2012 | By Aaron Wiener, Los Angeles Times

DUESSELDORF, Germany — Voters in Germany’s most populous state dealt a decisive blow to Chancellor Angela Merkel’s Christian Democratic Union on Sunday, preliminary results show, a potentially ominous preview of things to come for the chancellor in next year’s federal elections.

Merkel’s party mustered about 26% of the vote in the state of North Rhine-Westphalia, a drop from 35% in 2010 and 45% in 2005, the year she took office, the results show. The opposition Social Democrats and Greens, at about 39% and more than 11%, respectively, secured the majority of seats they needed to form a governing coalition.

The upstart Pirate Party, a group primarily devoted to Internet freedom, rode its recent surge in popularity to a nearly 8% vote share and won entry into its fourth consecutive state parliament. Merkel’s national coalition partner, the Free Democrats, managed a better-than-expected 8%, above the 5% threshold needed for representation, while the far-left Left Party was kicked out of the statehouse with less than 3% of the vote. Other parties with low shares accounted for the remaining votes.

Election results in North Rhine-Westphalia have been harbingers of change in the past. It was a loss in this state in 2005 that brought down the chancellorship of Merkel’s predecessor, Social Democrat Gerhard Schroeder. Now, the state that allowed Merkel to assume power in the first place could undermine her quest for a third term.

More at the link.

The French replaced President Nicolas Sarkozy with a Socialist, François Hollande, because they, too, were not pleased with austerity movements; former President Sarkozy also failed to reduce the traditionally high French unemployment rate, which is above 10%. But, in the end, though the will of the voters will be done in democracies, there are no options to reducing high deficits and living within their means: the French and the Germans, though still with strong economies, will eventually run out of other people’s money.

Your Editor has repeated this, time and time again: you cannot live beyond the means justified by your production forever. The Greeks and the Italians and the Spaniards and the Portuguese have already hit the wall, and run out of other people’s money, and the other European nations aren’t all that far behind. Austerity is, as the Chancellor noted, “very bitter,” but when the choices are between the bitter and all-out collapse, the choice becomes, if not easy, at least rational.

In the United States, we face the same choices. As much as our good friends on the left insist that there is a better choice, further stimulus, they are wrong: not only did the last intentional stimulus plan fail, but we have been, in effect, stimulating the economy for thirty five years, ever since we went from a trade surplus to a trade deficit, and have been borrowing and borrowing and borrowing to support a lifestyle more luxurious than what we have earned. We can still borrow more, due to the advantages the American economy has, but if we choose to go that route, we will eventually reach the point the Greeks have reached: collapse.

  1. According to snopes.com, Mrs Thatcher’s quote, though accurate in meaning, has been mangled through reuse. The direct quote is, “Socialist governments traditionally do make a financial mess. They always run out of other people’s money.”

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