March 11, 2010

The Greek crisis as an exercise in psychological projection

I'm a little tired of the Greek bashing which seems to dominate the financial news these days. The subtext seems to be that the Greeks want to retire too early, have lost control of their budget, and in general are a bunch of screw-ups. Of course, the Greeks do want to retire early, but so do a lot of other people. In Germany, for example, about 60% of the population is retired by the age of 55, which is why the official language surrounding places like the Trevi Fountain in Rome is German. They quit while they're still young enough to get around, and since we live one life, what's wrong with that?

Anyway, my socio-ethnic background is Greco-Redneck, so I tend to take umbrage at all this criticism of my ancestral heritage. My maternal grandfather came to this country in the first decade of the 20th century and did what many Greek immigrants did, he ran cafes. He worked twelve hours a day, six days a week, and made a success of his businesses. I won't tell you the name he usually used for his cafes because I still harbor a secret ambition to start one of my own with the same name. Of course, there's that 12/6 problem.

So as I was saying, we're pretty dismissive and snarky about the Greek inability to manage their finances. Meanwhile, inconveniently for the pundits on CNBC and other provincial opinion-makers who love clobbering the Old Country, the U.S. Treasury publishes its Monthly Statement right about this time every month. To put matters gently, any nation with a P&L that pathetic should really think long and hard about criticizing any other country, up to and including Zimbabwe. What a bloodbath this thing is turning into.

You can see for yourself at We have entered an era which might most accurately and piquantly be called Absurdist Economics. It's a bad joke. All you survivalists out there, with your .50 cal emplacements and food storage bunkers: okay, you were right. Feel better? I think we've arrived at the place now where the government is going to lose the ability to keep kidding even itself.

Against total revenues in February, 2010, of $107 billion, the United States government spent $328 billion. There are no typos in that sentence. The government ran a $221 billion deficit in a single month. We spent $46 billion on defense, which uses up 42% of the apparent income, but then remember that Social Security and Medicare are financed with their own independent taxes (all of which, and then some, are consumed by the programs themselves), and those FICA and Medicare taxes are included in that $107 billion number. Social Security paid out $61 billion (here come the Baby Boomers!) against actual FICA revenue of $49 billion (nearly half of the $107 billion total income). The FICA figure of $49 billion is supplemented by that mysterious "On Budget" entry of $13 billion, which brings the total FICA "income" figure to $62 billion, or just enough to cover the outgoes. My guess is that this "On Budget" addition is phantom interest from the Social Security "Trust Fund," and of course, as such, is not actual "money" transferred from this fiscal Black Hole but is simply a "subtraction" from the "Fund" (another instance of the Treasury's ongoing Zen practice of subtracting zero from nothing). Thus, in realistic terms, the Social Security program is running a $13 billion monthly deficit, and if you're playing along at home you'll recall that the program wasn't supposed to go negative until 2017 back in those halcyon days when the Kongressional Klown Kollege was blithely stealing the surplus and using it to fund the latest War of Choice.

So lay off Athens, guys. The Greeks gave us Socrates, Plato, Aristotle, Pythagoras, Archimedes, Euclid, Aristophanes, and other founders of Western Civilization. The United States, at this rate, is going to be remembered for the smoking crater Washington, D.C. 1980-present made of the place. The Greeks called it hubris. We might want to think about propitiating some of the Bigwigs up on Mount Olympus ourselves.