Because the government is being FORCED to make the hard choices they should have made a long time ago.
They are lowering the minimum wage by 22% and they are going to fire 20% of the government workforce. And still it will not be enough. They will default on their debt and probably leave the euro. They will end up with a weak currency and possibly lose 50% of their GDP in the first year. All in all it will suck for most Greeks.
Were there things they could have done to prevent this? There sure as hell were! Remember the ounce of prevention is worth a pound of cure cliché. Or, if your my age, you might remember the old Fram oil filter commercial where they said “Pay me now, or pay me later” Well the bill is coming due for Greece. Ouch.
Are there any hard choices the U.S. is kicking down the road? Duh! There sure as hell are!
At some point the U.S. will have to pay the price as well.
Will we have riots in the street when we are FORCED to make the hard choices? Probably.
Is there anything we can do to stop it. Not really.
As the Greek finance minister Evangelos Venizelos said “When you have to choose between bad and worse, you will pick what is bad to avoid what is worse.” We will be there soon enough.
I was lucky enough to get to talk to Kenneth Rogoff a few years ago about his book “This Time is Different” In it he researched 800 years of lending, borrowing, crashing and recovering. And guess what? This time is not different. It is always basically the same. The pattern tends to go like this.
The private sector borrows a shit ton of money and this inflates real estate and stock prices beyond their sustainable long-term trends. This makes banks look a lot stronger and more profitable than they are. When the bubble bursts the debts are so bad that the government eventually has to bail out the banks to avoid a recession. All this does is transfer the debt problem to the government. Does any of this sound familiar? Eventually the government can’t handle the debt problems. What follows is very painful. Hyperinflation, currency crashes, government default or some combination of general unpleasantness.
So the chances that you can personally do anything to keep the disasters at bay are infinitesimal. This shit has happened for at least 800 years and you can not stop it.
So lets ask a much better question.
Are there actions that YOU are kicking down the road? Are there things you can do now that will make your life massively better in the future?
If you’re waffling at all I’ll answer for you.
I know this because there are things I should be doing as well. Things I should have already done. I’ve lived and invested in Panama for 5 years and I still do not have my residency yet. Not because I can’t but because I’ve been too damn lazy. (I hate admitting this).
I urge you to take some steps now to become more resilient. You might not be able to avoid the riots in the street but you can avoid the riots in your head if you act now. If you don’t you will drive yourself crazy thinking “I could have… I should have…”
Remember that the last step in the pattern is recovery. There is always a recovery and the person who is prepared will be first in line to take advantage of it. I hope you will be that person.
OK have a great day, and go do something already!