Greece and Puerto Rico: Lessons for America

From Newt Gingrich:

Greece will hold a referendum on Sunday to decide whether it will stay in the Eurozone or leave it. Staying in the Eurozone will require Greeks to accept very harsh austerity cutbacks and reforms. Dropping out of the Eurozone would lead to a radically devalued Greek drachma.

Other countries that have accepted devaluation have seen their currency decline in value by as much as 84 percent. That means everything they import costs dramatically more and everything they export brings in less. For American and European customers, it would be a huge benefit, since staying in Greek hotels, eating in Greek restaurants, and buying Greek goods would be drastically cheaper.

Greece has forced itself into this position after years of living beyond its means. The country has too many bureaucrats, pensions that are unsustainable, regulations that kill jobs, and people who want to spend more than they earn.

Generations of irresponsible politicians have encouraged this habit of living beyond their incomes and spending more than they earn.

The Greek crisis has been building for years. Now it is being paralleled by a Puerto Rican crisis.

The Governor of Puerto Rico has announced that his island government owes $70 billion and can’t possibly repay its debt. He would like Washington to bail him out.

 

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