German news rarely notes more than a passing thought in the U.S. most news cycles. However, with the debt brush fires flaring all around the European Union, recent German actions towards EU member Greece deserve some attention in the US.
In the financial world, the severe budget problems of Greece are becoming more of a concern to the U.S. by the day. This has been heightened by the German people’s reluctance to bail out Greece, at least until serious structural changes are made by its government. The national and international media generally describe these types of austere measures as being “harsh” or “extreme” but without any meaningful description of specific reforms that would improve a nation like Greece’s finances.
For the first time since reunification twenty years ago, the German political class and people have begun seriously questioning why it should be the Eurozone’s banker of last resort when it is making some necessary budget reforms and others refuse. Germany recently raised its retirement age for public pensions from 65 to 67 while the Greece political class is reluctant to raise its retirement age from 61 to 63! It is hardly extreme for the German people to expect others they assist to show at least a modest shift in policies – and retirement with full benefit at 61 is an antiquated policy from the middle of the 20th Century.
The fact that the Greek political structure seems willing at times to cling to the ways of the past is relevant to our current situation in the U.S. Discussions about bailing out reckless states such as California and New York have only been placed on the back burner due to the health care debate dominating the past six months. These and other states’ fiscal conditions have only declined further and the debate in the U.S. will be far more heated than that of EU member nations Germany and Greece.
Why should states like Louisiana who have not promised politically-expedient public sector benefits to an army of government union bosses have to bail out those states who did? Why should those who have acted in such an irresponsible manner deserve to have others resources without making the necessary reforms to ensure that this sort of scenario will not happen in the future? Given the unpopularity of the bank bailout and the GM and Chysler takeovers by the government, imagine how bailing out California and New York will ignite an already angry electorate!