Greece, meet Compton
On Monday, Greece threw a monkey wrench into the global economy.
Greek Prime Minister George Papandreou is not normally the gambling type.
Yet in the political equivalent of an all-in bet at a high-stakes poker match, the beleaguered leader said Monday that he would ask Greek voters to determine whether to agree to a new, hard-bargained European deal to help the financially strapped country get out of debt. ...
The European deal calls for private banks to take a 50% write-down on the value of Greek bonds they hold in exchange for a $140-billion bailout loan to Athens -- the second bailout stitched together by the European Union and the International Monetary Fund in a year.
And how did the world's markets greet this planned exercise in democracy? As The Times' Henry Chu reported:
The political gamble sent stock markets tanking Tuesday, erasing many of the gains they had made during the short-lived euphoria that greeted the rescue plan.
"Greeks plunge Europe into new crisis," the German tabloid Bild said in a headline on its website, adding that the 17-nation Eurozone was "in a state of shock."
But it's Greece, right? And Europe.
Well, check out this headline in Tuesday's Times: "Compton in financial free fall."
As The Times' Abby Sewell reported:
Compton's finances are in such disarray that the city amassed $369,000 in late fees over the last year because it could not pay its policing contract with the Los Angeles County Sheriff's Department on time.
The city has already laid off about 15% of its workforce, and city leaders warn that more cuts may be on the way. City Hall has slashed spending, even canceling the city's popular gospel concert.
But most disconcerting is the city's looming deficit of $39 million, a sum that represents about 80% of its annual general fund budget. Standard & Poor's this summer lowered the rating of some of Compton's bonds to just above junk status. City officials said they're hoping for a short-term loan or line of credit to get through the year and vowed not to file for bankruptcy.
Compton, meet Athens. You sound a lot alike -- except I'm pretty sure there isn't going to be a Eurozone bailout of Compton.
Now, it's easy to say that we need austerity measures. It's easy to say that government has to live within its means. It's even easy for some to say "I told you so" and "They have it coming."
But real people are getting hurt in this. From the story on Compton:
Johnnie Davis, 64, is one of the dozens of city workers who lost their jobs over the summer. He got notice that he would be laid off from his job as a City Hall night custodian as he was recovering from surgery for prostate cancer. Davis and his wife now have no health insurance, and he has had to postpone follow-up doctor's appointments because of a lack of funds.
So when we talk about belt-tightening, and balanced budgets, and not raising taxes, and cutting services and so on, we can't forget the Johnnie Davises of the world.
When corporations act in their own interests, we call it capitalism. And when people do the same thing? What should we call that? Self-preservation?
I'm not sure. But you can bet there are a lot of Johnnie Davises in Greece. And when they go to the polls to vote on the Eurozone rescue plan, they aren't going to vote to go without a job or healthcare or other services.
And the financial and government elites are going to have to deal with that.
-- Paul Whitefield