by Victor Davis Hanson<\/p>\n
PJ Media<\/em><\/p>\n Greek Bonds, Anyone?<\/strong><\/p>\n The world is getting a little edgy when very few investors are willing to buy Greek bonds \u2014 given what they know about Greek politics and productivity. And so the interest rate has soared on ten-year-yields to above 7.5% \u2014 a chase-your-tail scenario, in which the bankrupt Greeks will have to increase the interest rate to attract capital, that in turn will go so high that they, the Greeks, will not be able to pay the debt, that again in turn will frighten bond buyers even more, that, of course, will send rates even higher.<\/p>\n California, take note. Some Stanford economists and analysts just refigured the cooked books at the various California public pensions and found a $500 billion shortfall. The state is already broke. Its taxes are the highest in the nation, the flight of its wealthy per week unsustainable \u2014 and its teachers apparently (please explain this?) furious that their salaries are the highest in the country and their students among the worst. So we either float more bonds, or ask retirees to take a cut or freeze. The latter is not even being discussed.<\/p>\n Who Said You Owed Anything?<\/strong><\/p>\n Chris Dodd is pushing a multifaceted credit card bill that probably will up rates on all to allow some more deserving to refigure their debts. (I hope not in the fashion that Chris Dodd gets mortgages, or Timothy Geithner pays his FICA, or Barack Obama buys a lot, or Tom Daschle reports limo perks or Charlie Rangel adds up vacation rent). Dodd\u2019s effort is a sort of relish to the administration\u2019s own plan to ensure that some underwater mortgages (note, I said \u201csome\u201d) won\u2019t have to be quite paid off.<\/p>\n I think you get my drift with these examples. If you don\u2019t, just note whom Obama serially demonizes \u2014 doctors who lop off too much, insurers who are just too greedy, CEOs of non-government-run companies who jet to the Super bowl, \u201cfat cat\u201d bankers, and so on \u2014 and whom does he worry far more about: anyone who was forced by the system to take out a debt and is again forced by the system into not paying it back. No wonder the Greeks are scrambling to find ways not to pay back their gargantuan debt.<\/p>\n Trust \u2014 How Quaint?<\/strong><\/p>\n We are not just in a war on those who have capital and loan it to others, but a war on the entire sinews that hold together the modern system of global finance \u2014 trust.<\/p>\n Following the Greek explosion, we heard of everything from fraudulent bookkeeping to the German responsibility to pay more reparations for World War II to the dangers of belt-tightening. All were euphemisms for Greeks to find ways of not having to pay back what the government freely borrowed \u2014 essentially to pay millions of unionized Greeks at work and in retirement. So where is all the money? Long ago spent on salaries for millions to do little, who now want more from those who do a lot (e.g., Germany)<\/p>\n The New Versailles<\/strong><\/p>\n The problem is not just the old \u201cbig government.\u201d The public is now more focused. They are reifying \u201cgovernment\u201d into millions of public workers and their technocratic overseers: all are far better tenured, salaried, and pensioned than their counterparts in the private sector. They are the new court hordes at Versailles. And we know their numbers have expanded almost geometrically, far faster than both the rate of inflation and population growth \u2014 most as rewards for paying off constituents, expanding the block of loyal entitlement-receiving voters, and in general ensuring a sort of pandemic government dependency in which 20 percent of the nation receives all of its monthly money from the government and another 20 percent receives most of it.<\/p>\n From what the administration announces almost daily, from the radio ads blaring now in the popular culture, and from congressional promising, I think I get the new narrative. \u201cTrust\u201d is an archaic construct established by capitalists to ensnare the more noble poor. When you buy that blue-ray DVD player or plasma TV (saw lots of that today at Best Buy in Fresno), in lieu of a catastrophic insurance plan, and add to it a night out at the Macaroni Grill and the multiplex, it is not all that certain you will have to pay all of that charge back. As you go from one maxed-up credit card to another, there will be a new company waiting to renegotiate your debt, and a demagogic congress person to explain why you were snookered into doing what you did.<\/p>\n \u201cWalking away\u201d is suddenly not defaulting, but a smart move when the house you were betting would go up went down in value. Note that we didn\u2019t have any law suits five years ago against new \u201cgreedy\u201d homeowners who woke up each year with thousands of dollars in \u201cequity\u201d that magically appeared out of nowhere. No one wished then to sue the speculative homeowner that banked rightly on his investment; instead, on the way down is where we get the human interest stories about greed \u2014 and the need to violate the trust of an obligation. It is all sort of analogous to the Old West stereotyped saloon scene, in which the confident would-be card player struts up to the card game, starts losing, and then overturns the table, guns blazing.<\/p>\n Cuts for Thee, Not for Me<\/strong><\/p>\n There are dangers to all this. Soon California will begin to realize that it either can drive out everyone still left who makes good money by raising more taxes (beyond the existing highest sales, income, and gas taxes in the nation), or can renege on what it owes bond holders, or will have to furlough its work forces far more days per month. (But note we always cut parks, playgrounds, patrol cars, and jails rather than the Assistant III social worker counselor or the Deputy Director of the Migrant Reentry program.)<\/p>\n And the call from our public employees (I was one for 21 years and so know well) will be for the state\u00a0in extremis<\/em>\u00a0either to violate its trust and not pay contractors, or not pay bond holders, or not pay almost everyone, before cutting spending on public employees. There are most certainly millions of government workers, each able to explain why his job is essential, why he is far better than his counterpart in private business, and why all those millions of rich locusts that blacken the skies with their Gulfstream 550s could make all this present nastiness go away, if we just went after them and got more of our money they stole. The noble aims of the many justify the means of meeting them.<\/p>\n We forget that the cry throughout most of classical antiquity when city-states and republics reached a Greek-like, California-like crisis, in which there was not enough money to pay people any more to go to the theater, or to vote, or to put on a play, or to receive free food and entertainment was \u201ccancellation of debts\u201d and \u201credistribution of property.\u201d The tyrants to Catiline made careers out of that for a half-millennium. The usual ancient antidote to insolvency was to violate trust: Coin more money of cheaper metals, cancel debts, and divide up the wealthy estates.<\/p>\n So again, these are dangerous times. There is no one in this administration reminding Americans to purchase wisely, not to take on debt that they cannot service, and to remember that no government of any size, especially not one as bankrupt as our own, can solve self-created miseries. Instead the 24\/7 megaphone is essentially, \u201cIt is not your fault you can\u2019t meet your mortgage, pay off your credit card, pay your taxes, pay for your college, or buy catastrophic health insurance, and we are going to rewrite the law to make sure we can get you even with all those who did those things to you.\u201d (Has anyone heard Obama state exactly how we are to pay back the soon to be reached $20 trillion in debt? Has he mentioned a payback plan yet or much of anything other than promising more borrowing to more constituents?<\/p>\n In short, in just 14 months we have redefined trust and \u201cdebt\u201d. Forget the old capitalist definition:<\/p>\n Debt:\u00a0An\u00a0<\/em>amount<\/em><\/a>\u00a0owed to a\u00a0<\/em>person<\/em><\/a>\u00a0or\u00a0<\/em>organization<\/em><\/a>\u00a0for\u00a0<\/em>funds<\/em><\/a>\u00a0borrowed. Debt can be represented by a\u00a0<\/em>loan note<\/em><\/a>,\u00a0<\/em>bond<\/em><\/a>,\u00a0<\/em>mortgage<\/em><\/a>\u00a0or other\u00a0<\/em>form<\/em><\/a>\u00a0stating<\/em>repayment terms<\/em><\/a>\u00a0and, if applicable,\u00a0<\/em>interest<\/em><\/a>requirements<\/em><\/a>. These different forms all imply\u00a0<\/em>intent<\/em><\/a>\u00a0to\u00a0<\/em>pay<\/em><\/a>\u00a0back an amount owed by a specific date, which is\u00a0<\/em>set<\/em><\/a>forth in the repayment\u00a0<\/em>terms<\/em><\/a>.<\/em><\/p>\n Try this the new egalitarian improvement:<\/p>\n Debt:\u00a0An amount of now non-essential capital supposedly \u201cowed\u201d to a wealthier person or well-off corporations for past life-saving borrowing. \u201cDebt\u201d is accrued by a system of entrapment, ostensibly manifested as a \u201cloan\u201d, \u201cnote\u201d, \u201cbond\u201d, \u201cmortgage,\u201d or other efforts at coercing repayment through usually illegitimate terms, and usurious interest demands. These different forms all force one pay to back an inflated amount owed by a completely unreasonable date, which was hidden carefully under the repayment terms of extortion.<\/em><\/p>\n Everything is now up for grabs and negotiable; there is no real debt, no trust anymore that we cannot look to government to readjust.<\/p>\n \u00a92010 Victor Davis Hanson<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":" by Victor Davis Hanson PJ Media Greek Bonds, Anyone? The world is getting a little edgy when very few investors are willing to buy Greek bonds \u2014 given what they know about Greek politics and productivity.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_newsletter_tier_id":0,"footnotes":"","jetpack_publicize_message":"","jetpack_is_tweetstorm":false,"jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false}}},"categories":[590],"tags":[],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p466Sb-rU","jetpack_likes_enabled":true,"jetpack-related-posts":[{"id":4120,"url":"https:\/\/victorhanson.com\/wordpress\/raging-against-them\/","url_meta":{"origin":1730,"position":0},"title":"Raging Against “Them”","author":"victorhanson","date":"January 2, 2011","format":false,"excerpt":"by Victor Davis Hanson PJ Media It\u2019s All Greek to Us In very un-Icelandic fashion, last week protestors in Athens tried to blow up a downtown courthouse. Over a year after the Hellenic meltdown, the Greek newspapers still reflect the popular fury \u2014 protests, strikes, senseless violence \u2014 at the\u2026","rel":"","context":"In "Global Warming"","block_context":{"text":"Global Warming","link":"https:\/\/victorhanson.com\/wordpress\/ahref=\/index.php\/categories\/angry-reader\/categorylink\/a\/global-warming-2\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":954,"url":"https:\/\/victorhanson.com\/wordpress\/greek-tragedies\/","url_meta":{"origin":1730,"position":1},"title":"Greek Tragedies","author":"victorhanson","date":"February 22, 2012","format":false,"excerpt":"br Victor Davis Hanson NRO's\u00a0The Corner There are a lot of new twists to the old story of massive demonstrations in Greece. This is the first time in my life (I first went to Greece in 1973) that I can remember Greek rioting and demonstrations that were not anti-American. Oh,\u2026","rel":"","context":"In "Greece"","block_context":{"text":"Greece","link":"https:\/\/victorhanson.com\/wordpress\/ahref=\/index.php\/categories\/angry-reader\/categorylink\/a\/the-world\/europe\/greece\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":5267,"url":"https:\/\/victorhanson.com\/wordpress\/defending-the-greeks\/","url_meta":{"origin":1730,"position":2},"title":"Defending the Greeks","author":"victorhanson","date":"March 10, 2005","format":false,"excerpt":"by Bruce S. Thornton Private Papers This talk\u00a0was presented February 28, 2005 at California State University, Sacramento at a dinner hosted by the Tsakopolous Hellenic Foundation in honor of California State Senator Nicholas C. Petris The centrality of the ancient Greeks to the foundations of Western Civilization once was an\u2026","rel":"","context":"In "Bruce S. Thornton"","block_context":{"text":"Bruce S. Thornton","link":"https:\/\/victorhanson.com\/wordpress\/ahref=\/index.php\/categories\/angry-reader\/categorylink\/a\/our-contributors\/bruce-s-thornton\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":894,"url":"https:\/\/victorhanson.com\/wordpress\/the-sick-man-of-europe\/","url_meta":{"origin":1730,"position":3},"title":"The Sick Man of Europe","author":"victorhanson","date":"March 18, 2012","format":false,"excerpt":"by Victor Davis Hanson Defining Ideas Why are the Greeks such whiners? Look to their tragic history and geography.\u00a0 Not long ago, European Union bankers gave the Greeks a \u20ac110 billion bailout \u2014 along with stern recommendations to stop cooking their books, to go after tax cheaters, to trim fat\u2026","rel":"","context":"In "Economy"","block_context":{"text":"Economy","link":"https:\/\/victorhanson.com\/wordpress\/ahref=\/index.php\/categories\/angry-reader\/categorylink\/a\/the-world\/europe\/economy-europe\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":7768,"url":"https:\/\/victorhanson.com\/wordpress\/7768\/","url_meta":{"origin":1730,"position":4},"title":"On Cyprus, the World Is Silent","author":"victorhanson","date":"August 14, 2014","format":false,"excerpt":"Because Turkey is not Israel. by Victor Davis Hanson \/\/ National Review Online Limassol, Cyprus\u00a0\u2014 Cyprus is a beautiful island. But it has never recovered from the Turkish invasion of 1974. Turkish troops still control nearly 40 percent of the island \u2014 the most fertile and formerly the richest portion.\u2026","rel":"","context":"In "The Middle East"","block_context":{"text":"The Middle East","link":"https:\/\/victorhanson.com\/wordpress\/ahref=\/index.php\/categories\/angry-reader\/categorylink\/a\/the-world\/the-middle-east\/"},"img":{"alt_text":"A U.N. peacekeeper in the buffer zone in Anatolia, Cyprus. (Andrew-Caballero-Reynolds) Photo via NRO","src":"https:\/\/i0.wp.com\/victorhanson.com\/wordpress\/wp-content\/uploads\/2014\/08\/pic_giant_081414_SM_Cyprus-Bufer-Zone-G.jpg?resize=350%2C200","width":350,"height":200},"classes":[]},{"id":683,"url":"https:\/\/victorhanson.com\/wordpress\/greece-alone-and-broke-again\/","url_meta":{"origin":1730,"position":5},"title":"Greece Alone and Broke–Again","author":"victorhanson","date":"June 26, 2012","format":false,"excerpt":"by Victor Davis Hanson Tribune Media Services The recent indecisive Greek elections could be summed up by two general themes: Greeks want to stay in, and expect help from, the Eurozone. But they still do not want to take the necessary medicine to stop borrowing billions of euros from northern\u2026","rel":"","context":"In "Economy"","block_context":{"text":"Economy","link":"https:\/\/victorhanson.com\/wordpress\/ahref=\/index.php\/categories\/angry-reader\/categorylink\/a\/the-world\/europe\/economy-europe\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"_links":{"self":[{"href":"https:\/\/victorhanson.com\/wordpress\/wp-json\/wp\/v2\/posts\/1730"}],"collection":[{"href":"https:\/\/victorhanson.com\/wordpress\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/victorhanson.com\/wordpress\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/victorhanson.com\/wordpress\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/victorhanson.com\/wordpress\/wp-json\/wp\/v2\/comments?post=1730"}],"version-history":[{"count":2,"href":"https:\/\/victorhanson.com\/wordpress\/wp-json\/wp\/v2\/posts\/1730\/revisions"}],"predecessor-version":[{"id":1732,"href":"https:\/\/victorhanson.com\/wordpress\/wp-json\/wp\/v2\/posts\/1730\/revisions\/1732"}],"wp:attachment":[{"href":"https:\/\/victorhanson.com\/wordpress\/wp-json\/wp\/v2\/media?parent=1730"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/victorhanson.com\/wordpress\/wp-json\/wp\/v2\/categories?post=1730"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/victorhanson.com\/wordpress\/wp-json\/wp\/v2\/tags?post=1730"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}