The public debt Greece owes is not the problem fueling the Greek Debt Crisis. The real problem is that the Greek government does not collect enough revenue to pay its debt and cannot do so without financially crushing its People. What Greece lacks is an economy capable of providing for the needs of the Greek People.
The Greek economy has been sustained by debt that has fed its addiction to foreign capital and allowed it to neglect the need for increased domestic production to provide for local needs. In other words, Greece does not have a real economy, because it relies on global production and finances that reliance with debt. In many respects, the informal economy, which makes up 25% of the Greek economy, represents the real Greek economy as the services and goods of the informal economy would still be provided if the global and national economy collapsed.
Looking at Puerto Rico as the Greece of the United States, the US territory also faces a potential default on its massive debt. Like Greece, Puerto Rico is a tourist paradise with a service industry economy that has failed to build a production economy even as it has consumed billions in outside debt. Unlike Greece, few are focusing on Puerto Rico and no one is trying to bail it out. If Puerto Rico defaults, the solution is to let the Puerto Rican economy hobble along. Puerto Rico residents, who are US citizens, can migrate to the mainland.
Despite the hype, the Greek Debt Crisis may well end in a similar fashion. As a member of the European Union, Greek workers can work elsewhere in the Eurozone. It is, however, important to recognize much of the Caribbean is financed remittances from migrant labor. Leaving behind the least productive members of an economy makes it far more difficult to rebuilt an economy while the reliance on small payments from those working in foreign countries makes the Caribbean economically insecure. What this mean is that Puerto Rico and Greece would face the same struggle to rebuild their formal economy should they default.
Meanwhile, the US economy and the economies of Europe do not offer very good prospects. There are plenty of regions within both the United States, e.g. Detroit, and Europe that face the same scenario as Greece and Puerto Rico. Although it is easy to focus on the debt troubles of these developed countries, insufficient job creation, growing income inequality, rising costs, and an increasing number of impoverished demonstrate Puerto Rico and Greece are just symptoms of the underlying problem, i.e. the global economy is not real. It is not real, at least, for the majority of people, because it is diverting global wealth (ownership) to a minority of the population.
The national economies of the world are no longer driven by serving the needs of their People and making them more productive. They have been transformed to cater to the needs of the global economy and the global economy needs more consumption and more production, not more producers. In other words, the global economy relies on continual increases in consumer spending and continual increases in the productivity of workers, which means there is less need for more workers.
Furthermore, The US economy is the largest and most successful economy, so it serves as a prime example of why the global economy is not serving the needs of people and why it is unsustainable. Before the 2008-2009 Great Recession, wealth distribution was narrowing significantly, the median income was shrinking, and the US trade deficit was exploding. Consumer spending was reasonably strong while the stock market was rapidly expanding and home prices were exploding.
Unfortunately, much of this economic activity was financed by cheap, easily obtained credit. At the same time, policymakers decided the future of the economy was in intellectual property. Holding onto jobs that required manual and skilled labor was, therefore, a waste of a time. These "throwaway jobs" could be outsourced to help boost the profits of corporations to increase stocks and dividends to the benefit of Americans who owned these companies.
Clearly, there are always losers on the stock market while those in need of a job or better wages would not be able to afford to investments in their future, i.e. they would be locked out of the formal US economy. Meanwhile, less than a third of Americans hold advanced degrees. Service industry jobs often pay poorly and the internet offers too few opportunities that actually pay well enough to support the American lifestyle. In other words, the US needs the production jobs being treated as throwaway jobs for the formal economy to function.
During the onset of the 2008 Housing Crisis, reality hit when people suddenly realized the fuel of the US economic engine was an imaginary asset called debt. In turn, the world discovered consumption was not the engine of the economy; it was overconsumption. The unfortunate truth about debt and over consumption is that they cannot be sustained. More importantly, the world cannot continually consume more and pile on more debt to pay for that consumption.
The common thread uniting the economies of the world appears to be debt that cannot be repaid and consumption that people cannot afford. For the consumers and creditors of the world, this does not bode well. For the producers of the world, a sudden loss of customers will require a painful readjustment. That said, there is still a chance to lessen the impact of a global economic catastrophe.
First, the economies of the world need to refocus their attention on production and providing for the needs of their local population before they use their excesses production to feed the global economy. Second, creditors and/or governments with the leverage to force creditors to make concessions, need to be willing to forgo profit on their loans to ease the burden of debt. If they do not, they will quickly discover debt is not a real asset.
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