It is clear from the events in Libya (where a declaration of freedom has just been proclaimed) and Tunisia (where free elections are being held--the first in living memory) that there is some kind of essntial change that is happening in the region. As stated in an earlier post there is little evidence that these fragile events will produce anything like a working democracy. But having said that, it has become apparent that the forces of the masses--peaceful in Egypt (well mostly peaceful) and Tunisia and bloody in Libya have given hope to the thousands in the region. Some, like Syria, are still a work in progress but I believe that is now a matter of time rather than of substance.
For any meaningful government to take hold there must be a social contract that is entered into between the electorate and those that represent them. There must be an open forum where policies are debated and actions taken that are consistent with the general ethos of the population. That process of trust between the population and their elected representatives may take years (in English democratic terms, almost 800 years) to develop. Too much say by a fragmented electorate leads to the kind of factionalism that is killing Israel. Too little say leads to a disconnect between the electorate and their elected leaders. New democracies don't much like transparency--the internal care and feeding of a democracy may be too much for an electorate to accept. So the fragility continues until either the electorate or their representatives win out. If the electorate gets too frisky their representatives declare that the population is ungovernable and a strongman--or woman--takes over.
And now on to Greece. For a long time there has been a disconnect between Greece's politicos and the population. It reminds me of the old Russian joke about workers who are standing around drinking vodka. When asked why they were not working they said, "They pretend that they are paying us and we pretend that we are working". In Greece the government paid for programs with money they didn't have. This gave rise to a level of expectations that kept rising until the money ran out. Now the population is left with their expectations and the politicians can only respond with harsh measures. No amount of money will fill the void. And to make matters worse, whatever money there is comes in the form of Euros given, largely by the Germans. At some point you have to admit that you are broke. Governments have defaulted on debt before and will do so in the future. Start with a new slate rather than piling up debt, the interest on which will leave Greece in penury for generations. Someone--and not the old guard--has to tell the king that he has no clothes. It might as well be now. Any course of action is likely to give rise to more civil unrest and, until the country comes to believe that it has to practice restraint and rebuild its future, no near term resolution of the problem can even begin.
The same problem exists for the United States. They are now borrowing more than 75% of GDP. For many years interest on the debt--and particularly if interest rates rise--will consume much of the working capital that the government needs to address any reasonable domestic agenda that it puts forward. Technically speaking, the US is broke. What is more, it went broke on the backs of largely middle class people. The banks were preserved. The auto companies were preserved. The people--ordinary people-- shouldered the brunt of the collapse. When citizens complain that the profits are made by business and the losses are sustained by the middle and lower classes, this is not far from the truth. The Occupy Wall Street is just the tip of the iceberg. Politicians are gridlocked--locked in their ivory tower with the inability to do anything meaningful to aid those most in need. It is shameful that 48 million Americans are on food stamps and 10 million homes--representing more than 20 million people--are in foreclosure. Those populations who were disadvantaged before the collapse are now mired in the mud. There is no social program money to be had. States and municipalities are broke. It's only a matter of time.
The OWS gang is misdirected. Banks are easy to blame. What appears more to have happened is that government is to blame. For not acting sooner. For not acting in a meaningful way when most of the economy was in distress. President Obama spent his political capital on healthcare--a worthy cause. But it should have been spent on job creation. He had a majority in both Houses of Congress and could not even get his Public Option through. The recent initiatives on mortgage financing is too little too late. The country needs a moratorium on mortgage foreclosures. An occupied house is worth more than a vacant and vandalized one. Banks should eat their losses and get help with liquidity. And let's get on with rebuilding the housing sector. These kinds of initiatives should be undertaken by a Democrat-Republican coalition where nobody takes the blame and nobody takes the credit. It won't happen. Until government is forced into some kind of action. The upcoming election makes it unlikely that such far sighted action with be undertaken. So the clock is ticking.
How it will come and from where it will come is unknown. Islam has already wrecked the American economy on 9-11. Islam could have a hand in fostering unrest in America. That was part of Bin Laden's plan. It could come from the inner cities where people without hope have little to lose. It could come from the middle classes many of whom are hopeless and living on benefits that are sure to run out. But it will come. Believe me.
Bernie.
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