"We Are All Greeks" (Updated)

The Federal Reserve Open Market Committee met this week and held to the major tenets of its monetary policy. Rates will remain unchanged at near zero; Operation Twist will continue to extend purchases of longer-term Treasuries; language that rates will remain exceptionally low through mid-2013; and principal payments from its holdings of agency debt will be reinvested in agency mortgage-backed securities. The Committee anticipates “a moderate pace of economic growth over coming quarters and consequently anticipates that the unemployment rate will decline only gradually.” The statement also said that the FOMC “anticipates that inflation will settle, over coming quarters, at levels at or below those consistent with the Committee's dual mandate (inflation and employment) as the effects of past energy and other commodity price increases dissipate further.”

At the margins, the economy is clawing its way back. But the modest gains reported this week regrettably do not portend an end to the malaise this great economy suffers.  Regardless of what the administration and the Federal Reserve say, there is no way this economy resumes its potential until debt and deficit spending are addressed both here and abroad. We must endure the painful consequences of reversing decades of excess. There is NO magic medicine.

Erskin Bowles, co-leader of President Obama’s fiscal commission told the congressional supercommittee seeking a $1.5 trillion debt-reduction package, “I’m worried you’re going to fail.” The 12-member panel is just three weeks away from its deadline with no agreement in sight.

Former Senator Pete Domenici of New Mexico, a Republican, criticized Democrats who oppose changes to Medicare and Republicans who refuse to accept tax increases. “They are both complicit in letting America destroy itself, in letting this great democracy destroy itself because we don’t want to make tough decisions,” Domenici told the supercommittee. “I hope you heard that.”

Chuck Bently of Crown Financial Ministries notes that Veronique Riches-Flores of France’s largest bank, Societe Generale, recently entitled her analysis of the crisis, “We are all Greeks.” According to Bently, “she was bluntly pointing out that the member nations of the Organization for Economic Cooperation and Development (OECD) all have unsustainable levels of debt. Essentially she made the case that both the US and European nations are facing tough choices ahead and that she foresees the need for austerity plans in most of the Western world.”

The hour has come, for this country and Europe, which are rushing headlong into the abyss, to deal with, not only debt and deficit spending, but more importantly, the pathalogical spending beyond means. It is an attitude particularly ingrained in our political system. Democrats and Republicans stand diametrically opposed on the role of government. Each year as they debate the so-called budget, they undertake an impossible mission; to reconcile small government and large government. When they fail, as they inevitably always will, they simply spend amounts they must on each side to re-gain election and pass the self-serving spending excesses onto the next Congress and the mounting debt to future generations.

We are all Greeks and our future is unfolding before our very eyes in Europe. We united as a country to save ourselves from a $5.00 fee banks were going to charge us for using our debit cards to spend our own money. The quesiton in the coming year is; will Americans unite to save ours and future generations from a growing and crippling dependence on government? Will we allow ourselves to be distracted by the political sideshow that is "Occupy Wall Street" while the largest and most corrosive corporate monopoly in the land - Washington DC - grows ever more powerful? Next November we will know whether this country will remian on the smooth downhill road to Greece, or the difficult road less traveled. The Greeks have given us Democracy and a warning. Here's praying we use the first to heed the second.