Europe, fostering vast empires and giving birth to Western democracies that have created great sums of wealth and prosperity for generations, is now teetering on the brink of bankruptcy.
Greece, having given birth to the first democracy and free-market economics, is now a bankrupt shell of its former self.
The U.S., once the largest creditor nation in the world and an economic giant, is now the largest debtor nation because for too long, as with Greece, it has lived way beyond its means.
Greece’s national debt, according to Vanguard Investments, has reached $500 billion, surpassing its total economic output. In the U.S, when you include local, state and federal liabilities, the national debt ran close to $61 trillion as of June, according to USA Today.
Recently, European leaders announced a new deal to try to fix the current crisis. The deal consists of additional bailouts of 130 billion euros while persuading banks and private investors to reduce Greek debt holdings by 50 percent. The deal can temporarily relieve Greece of some of its debt, but may not prevent a default of its obligations.
Greece is bankrupt because of lavish entitlements and out-of-control spending that exposed the European Union as weak and incapable of handling the worsening European debt crisis. The big three – Medicare, Medicaid and Social Security – are sinking the U.S. deeper into debt as baby boomers begin to retire and enter a broken system that is costing taxpayers trillions of dollars.
With entitlements, the more people that enter the system the more it costs, to the point where it becomes unsustainable. This leads to massive deficits, a depreciated currency and a reduced standard of living. The European Union is crumbling from within because most European nations, such as Greece, have a debt problem that, if it implodes, will wreck European and U.S. financial markets.
Unemployment in Greece, Spain and Portugal is in the double digits, leading to a youth revolt consisting of 20-somethings who cannot find work in the wake of a financial crisis that is destroying the West.
Unemployment in the U.S. is no better, as the unemployment rate still hovers close to 10 percent. Meanwhile, the real unemployment rate, unemployed workers who have given up their job search or are underemployed, is actually closer to 16 percent.
The future of the U.S. economy can be predicted by the current turmoil in Europe, as Greece serves as a smaller version of what is to come.
European and American leaders are in disarray as they try to manage a crisis that was created because of their failure to see the coming storm. Greece has managed to stay afloat because of bailouts from members of the European Union. However, who will bail out America if and when our economy turns for the worse?
Frank Nuez is a senior majoring in accounting.