Greek lawmakers recently approved a pivotal bill that will provide hardship for their fellow countrymen, but it provides the only hope to salvage their country from bankruptcy. The measure contains spending cuts of $40 billion for five years and tax hikes. The International Monetary Fund (IMF) and the European Union pretty much demanded these measures in order to provide any type of bailout loans.
Greek representatives stated they only had funds until mid-July to pay government salaries, pensions and debts. Without the bailout loans, Greece would virtually shut down this month.
It sparked violent demonstrations and riots in the streets. Many of the citizens went on strike to protest the new measures.
The European debt crisis continues. Portugal and Ireland are next on the list with huge debts. Will the EU’s richer countries (Germany and France) continue to bail out their counterparts or will there be a domino effect that spirals out of control?
What about the financial health of the U.S.?
The U.S. might not be in the same financial distress as Greece, but it is clear that our country will suffer if lawmakers don’t resolve our current debt crisis. If Congress fails to agree on whether to lift a debt ceiling of $14.3 trillion by August 2, the U.S. government will be in default.
The IMF has indicated that a “severe shock” will occur in the global markets if our financial crisis is not resolved.
At issue is the $9.7 trillion of U.S debt held by investors and foreign countries.
The Congressional Budget Office has projected that by the end of the decade, we’ll be $20 trillion in debt, which would be 100 percent of our Gross Domestic Product, the market value of all final goods and services we produce.
Can we sustain this amount of debt?
Consider this. Our debt amount is $14,300,000,000,000. This equates to roughly $46,000 worth of debt per citizen or about $130,000 of debt per taxpayer. It costs around $225 billion a year just for interest and is projected to grow to nearly $800 billion in 10 years. This is money down the drain.
So should we delay the inevitable default by lifting the debt limit? Is raising taxes on the wealthy the answer or should we cut entitlements?
Is there any way to stop this financial crisis before the train wreck?
Let’s look no further than New Jersey for possible solutions. Gov. Chris Christie has led his state through the brink of collapse. Reform was the only alternative. Tough decisions were made and sacrifices will be needed, but tough times call for drastic measures, like in Greece.
Both Republicans and Democrats need to stop with the blame game and move on. No one wants gridlock and uncertainty. We prefer compromise for the good of all.
We only have a short time to react, so let’s hope that these folks can work together and resolve these issues so we don’t end up in a Greek style crisis.