[Source: Signs of the Times]
“Countries don’t go out of business. . . . The infrastructure doesn’t go away, the productivitity of hte people doesn’t go away, the natural resources don’t go away. And so their assets always exceed their liabilties, which is the technical reason for bankruptcy. And that’s very different from a company.” —Walter Wriston, former Citicorp chairman.
Countries don’t go out of business.â€ Most of the time, citizens of all walks of life, whether rich or poor, whether investors or hourly workers, whether mortgage holders or mortgage lenders, can take that statement for granted. But recent developments in a number of countries around the world, including several that make up the European Union, have exposed the fallacy in such thinking. And Greece has become the poster child for the problems.
For decades, Greek governments have spent more money than their economic output has produced. Greek citizens enjoy generous pensions, short workweeks, lengthy vacations, and, in general, a lifestyle their productivity does not support, and has not supported for many years. Until recently, these policies remained wildly popular. As George Bernard Shaw famously observed, “A government which robs Peter to pay Paul can always depend on the support of Paul.â€