Update on Greece: Greece's misreporting of its debt , more strikes, and Greece to seeks to activate aid package.

(This is long. It probably won't be read in its entirety. The Ayn Rand article is a good simple explanation of what is wrong with the world's economy.) This is a great post to follow the previous one about unions and how they have helped to bankrupt states. We can see a more progressed parallel situation happening in Greece and the EU --this provides a look at America's and the world's future, if you care. Greece has under reported its level of debt and there are more strikes,

Civil servants staged a 24-hour strike Thursday against austerity measures and expected job cuts by Greece's crisis-plagued government, and the EU's statistics agency said the country's budget was even worse than previously thought."
The strike disrupted public services, shut down schools and left state hospitals working with emergency staff. Protesters from a Communist-backed trade union blockaded Athens' main port of Piraeus, disrupting ferry services. Eurostat, meanwhile raised Greece's budget deficit in 2009 to 13.6 percent of gross domestic product from its earlier prediction of 12.9 percent, while the ratio of government debt to GDP stood at 115.1 percent, the second highest in the European Union after Italy.
In comments that are sure to rattle markets, the statistics agency also expressed "a reservation on the quality of the data reported by Greece." It also said Greek's 2009 figures could be revised further, to the tune of 0.3 to 0.5 percentage points of GDP for the deficit and 5 to 7 percentage points of GDP for the debt.[...] About 3,000-4,000 protesters marched through central Athens, carrying banners reading 'tax the rich' and 'Don't take the bread from our table.' Scuffles broke out when about 150 demonstrators challenged police lines near the city's central Syntagma Square, and police responded with tear gas.

The strikes are not that big of a deal, but it influencing the politician's will to make the tough budget cuts. There are some reports out there saying that America's level of debt is much higher than stated especially when considering all the unfunded liabilities and, as noted in the previous post, most states' pension funds are underfunded, especially California's, are vastly under funded. "Markets were shocked last fall when the government announced that the previous conservative Greek government had issued misleading financial data for years." How will the world markets respond when the magintude of America's debt is made know or when the harmful effects are manifested?














Greece has now requested to activate the IMF and EU bailout package.

Greece bowed to overwhelming pressure from financial markets on Friday and appealed for emergency eurozone loans in what will be the first rescue of a euro area country. Greece’s socialist government said the prospect of financial collapse had forced it to ask for the activation of a €30bn ($40bn) lifeline that could ultimately be worth €45bn once a contribution from the International Monetary Fund is included. The request marked a defining moment for the European Union, whose ambitions to play a more prominent role in world affairs rest partly on a claim of successful economic integration that the Greek debt crisis has thrown into doubt.

The long term effects on the EU will have to wait to be seen. Will it be broken up or will it be strengthened?

Greece must accept more austerity measures as part of accepting a bailout and this does not sit well with the unions,

The IMF is likely to demand tougher austerity measures than Mr Papandreou adopted in his 2010 budget. Greek trade union leaders warned that they would strike in early May to protest against any new measures that threatened salaries, pensions and employment rights. 'This mechanism adds to the threat that workers’ rights are about to be overturned. We will take the road of social resistance and increased mobilisation,' said Spyros Papaspyros, head of Adedy, the public sector union.

I don't know if these strikes will have a large enough impact to prevent the implementation of the "tougher austerity measures". While it is a good thing that the IMF is demanding tougher austerity measures by Greece, it is yet to be seen if these cuts will be meaningful, at the end of the day the IMF is dictating what a nation must do. What will the world body demand when it has to start bailing out the major economies of the world? Hopefully in line with what the IMF is currently demanding.

The overall structure of the world economy can best be summed up in the last half of this article by Rand. You can listen to it at Ayn Rand dot org, start at min seventeen.

How does this relate to America and your future? Look at how much in debt the States are and the level of debt that our government has with all of its unfunded liabilities and you can see that America is behaving like Greece did. According to what this guy is saying, one can compare what Greece has done financially and compare it to what this guy is pointing out that America is doing and one can see that America will be facing a similar situation that Greece is.

Bill Gross is used to buying bonds in multibillion-dollar batches. But when it comes to U.S. Treasury bills, he's getting nervous. Gross, a founder of the investment giant Pimco, is so concerned about America's national debt that he has started unloading some of his holdings of U.S. government bonds in[...] 'In order to pay the interest and the bill when it comes due, we'll simply have to issue more IOUs. That, to me, is Ponzi-like,' Gross said. "It's a game that can never be finished.'[...]It's a tough task. The short term looks awful, and the long term looks hideous. Under any likely scenario, the federal debt will continue to balloon in the years to come. The Congressional Budget Office expects it to reach $20 trillion over the next decade -- and that assumes no new recessions, no new wars and no new financial crises. In the doomsday scenario, foreign investors get spooked and demand higher interest rates to continue bankrolling American profligacy. As rates shoot up, the United States has to borrow more and more simply to pay the interest on its debt, and soon the economy is in a downward spiral.[...]Of course, at least in theory, this problem can be fixed.[...]But that premise is what has people like Gross worried. In addition to running a budget deficit, Washington for years has had a massive deficit of political will.[...]Whether on taxes, entitlements, military retooling, financial reform, energy policy or climate change, Washington is mired in a political enmity that makes tough decisions nearly impossible.[...]Many careers in Washington have come to an end as casualties of the long battle to restore fiscal balance.[Emphasis mine.]

Unless this political will can be found, in the long run a collapse will be the mechanism to force change. Of course things will get better in the short run, but one must have a long-term perspective to see where all of this is taking us. This whole process started over one hundred years ago, a much longer span of time than any of our lifetimes, and each successive financial upheaval is adding to an end result of economic ruin--nothing new in the history of mankind. If you are over fifty, the usual short-term perspective will hold true in that things will get better and you might not have anything to worry about; but for us younger people, we will be facing a very real economic downturn and upheaval that will greatly impact us and one that will be a mechanism for change in the structure of the world political and economic makeup.

America will face a debt-driven crises unless MAJOR changes are made. This will not happen.

When I spoke to Peter Orszag, the director of the Office of Management and Budget, he expressed optimism that the administration can balance the primary budget -- not including interest payments -- by 2015. The longer-term deficits are his bigger worry. Asked if the political process in Washington is broken, he answered: 'I think it's too soon to know whether the system's broken. The problem is not what happened last year or this year. The real issue is when we move forward in time, something has to give.'[...]'It's becoming immediately apparent that some countries will not do especially well and may not escape the debt trap from the recent financial crisis, Greece and Iceland being the most prominent cases," Gross said. 'But now investors are even looking at the best of the best, including the United States.' That's also the concern of Michael Burry, the investment guru who predicted Wall Street's meltdown and made millions by placing bets against (or "shorting") the financial sector. Burry, one of the protagonists in Michael Lewis's account of the financial crisis, 'The Big Short,' believes the federal government is behaving like the companies that lost billions in mortgage-backed securities. He told me he sees the common mistake of focusing on short-term benefits -- whether quarterly earnings or the next election. The world doesn't want America to go broke, he points out. Americans are the planet's greatest consumers. But if this is a bubble, it will burst with little warning, Burry said. 'Strictly looking at the monthly Treasury statement of receipts and outlays,' Burry said, 'as an 'investor,' you see a company you might want to short.' [Emphasise mine.]

When investors start to loose confidence in America, it will faces the same situation as Greece is.

This is look at America's and the world's future. Well worth the peek at the world's economic future. Are all of these reports overblown? Read some history and learn a little about economics to determine this for yourself. Either way, there will be some economic upheavals coming in our lifetime.