Today, Greece is only the tip of a very large iceberg. Portugal, Spain, Italy and Ireland together owe $3.9 trillion in short- and medium-term debts, an amount larger than their combined GDP, estimated last year at $3.3 trillion.
They'll soon have to make massive, unpopular cuts in long-cherished welfare programs or go bust. Even Britain's in the same boat.
They must act now, because the population in Europe is getting old fast. In the future, nations will have neither the will, the wealth nor the productivity to make the necessary adjustments. They'll be bankrupt, living hand-to-mouth.
There's no schadenfreude in this for us, since the U.S. is moving down the same path. Today, our deficit is close to 11% of GDP, and in just 10 years our total debt-to-GDP ratio will hit an economy-killing 90%. We have more than $107 trillion in unfunded liabilities.
As we've observed before, it seems to be a chronic condition of Western democracies that pusillanimous politicians promise far more than they can deliver - and then, almost in unison, blame capitalism (the only real wealth creator) for their ills.
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