Greece is the perfect example of the eventual outcome of unchecked spending – especially as it creeps closer and closer to defaulting on its massive debts [1], despite multiple government bailouts [2] in May 2011. One recent BBC News headline warned: “Greece: ‘Default within the euro is possible’.”
But,
looking back, some journalists predicted the opposite: that the Greek
economy would survive because of government bailouts. Huge fan of government-deficit spending [3], Paul Krugman, has been writing about Greece a lot, arguing that its trouble is proof that austerity doesn’t work.
CNBC’s
Jim Cramer was confident Greece’s desperate situation would be
“resolved one way or another” as recently as March 7, 2012. He said on
“Today” “I feel Greece will be resolved one way or another. It’s going
to look bad in the headlines, but it will be, in the end, a neutral. It
will not help us or hurt us here.”
CNN
supplied a video called “Why Greece won’t default” on June 21, 2011
that featured Fortune’s Katie Benner saying “No.” Benner said that the
lesson learned from Lehman Brothers was that the government will step in
if “they think it is absolutely necessary [4].” She also wrote a piece for CNN Money in which she said “the
rational market is no match for a group of determined government
mandarins who will prop things up once they realize how high the stakes
are.” [5]
Numerous economic analysts predicted [6] that the Greek economy would inevitably default – and there were journalists agreed with them [7]. But the journalists, like Cramer, who remained convinced that Greece would not go into default echoed the reassurances of Greek politicians [8], European politicians [9], and IMF officials [10],
who swore “we won’t let Greece fall” and that the Greek economy would
not default “if the Greeks do what they have to do.” Jamie Dimon, the embattled CEO [11] of JP Morgan Chase, also argued that [12] Greece would not default.
This vote of confidence was echoed by Obama’s endorsement of that bailout [13].
An official Feb. 21, 2011 White House statement declared that he
“welcomed last night's agreement in Europe on a new rescue program for
Greece to help reduce its debt to sustainable levels.”
The
looming failure of the Greek bailouts merely proves that unchecked
government spending for years eventually becomes unsustainable – despite
current media [14] claims that the recent European elections are further proof that slashing spending is the wrong approach..
The liberal news media is often [15] wrong [16] when it comes to financial matters [17]. Looking to Greece, it appears some of them may be wrong again.
