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Doomsday on the Mediterranean

1/23/2015
By Charles Payne, CEO & Principal Analyst

There is a big election in Greece tomorrow. It might not have the impact it would have had a few years ago, even a few weeks ago, because the European Central Bank (ECB) will begin spreading cash throughout the continent, save skipping Greece for at least six months.

The Greek people, already living under austerity from the good old days, in return for hundreds of billions in bailout money want to go back, and they simply do not care about the fallout. Look at the goodies Syriza is promising if they take power in Greece.

Yes, reading that list was like reading President Obama’s wish list and recipe for staying in power.  However, this all comes with a hefty price tag. In Greece, the debt is 175% of the Gross Domestic Product (GDP), and unemployment is at 25%, down from 28%.

Today, our massive social programs and giveaways coupled with profligate spending, has sent our debt to a GDP ratio above 100%.

People say all the time that debt is no big deal, and we can always pay the interest, but there’s a not-so-curious correlation to our slowing GDP growth and mounting debt- look at these numbers.

While a Syriza win would be upsetting, the world is not being held hostage anymore, but the cautionary tale continues, because unlike Greece, when America’s day of reckoning comes, there are not enough printing presses in the world to save us. 

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Charles Payne
Wall Street Strategies


 

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