Greece Enters Death Spiral

The tensions are rising in Greece. You simply can't announce that the retirement age has been raised from age 53 to age 60, and cut a bunch of government jobs and social programs without people getting a tad riled up.

We have been saying that we believe it is foreshadowing of what WILL come for America....we just don't know exactly when.

Here is what Spiegel Online International is saying;

The austerity measures that were supposed to fix Greece's problems are dragging down the country's economy. Stores are closing, tax revenues are falling and unemployment has hit an unbelievable 70 percent in some places. Frustrated workers are threatening to strike back.

This dire prognosis comes even despite Athens' massive efforts to sort out the country's finances. The government's draconian austerity measures have managed to reduce the country's budget deficit by an almost unbelievable 39.7 percent, after previous governments had squandered tax money and falsified statistics for years. The measures have reduced government spending by a total of 10 percent, 4.5 percent more than the EU and International Monetary Fund (IMF) had required.

The problem is that the austerity measures have in the meantime affected every aspect of the country's economy. Purchasing power is dropping, consumption is taking a nosedive and the number of bankruptcies and unemployed are on the rise. The country's gross domestic product shrank by 1.5 percent in the second quarter of this year. Tax revenue, desperately needed in order to consolidate the national finances, has dropped off. A mixture of fear, hopelessness and anger is brewing in Greek society.

The entire country is in the grip of a depression. Everything seems to be going downhill. The spiral is continuing unabated, and there is no clear way out. The worse part, however, is the fact that hardly anyone still hopes that things will improve one day.

See it here; http://globaleconomicanalysis.blogspot.com/2010/08/greece-enters-death-spiral.html

Of course when people get fearful and lose hope it breeds unrest....and that unrest is coming for Greece. And to think that Greece used to rule the world.

Menelaos Givalos, a professor of political science at Athens University, has appeared on television, warning viewers that the worst times are still to come. He predicts a large wave of layoffs starting in September, with "extreme social consequences."

"Everything is getting more expensive, I'm hardly earning any money, and then I'm supposed to pay more taxes to help save the country? How is that supposed to work?" asks Nikos Meletis, the shipbuilder. He predicts the situation will only become more heated. "Things are starting to simmer here," he says. "And at some point they're going to explode."

So ask yourselves....if California starts cutting the welfare, foodstamps and housing allowances...and then lays off 200,000 workers....do you think it could lead to "extreme social consequences"? How about in Illinois? How about in New York and New Jersey? How about Nevada and Arizona?

Could we be reading a headline in 4 years that says, "U.S. Enters Death Spiral"?

I believe that answer is; "yes"....and that day could be here sooner than we all want to admit.