Europe is in deep financial trouble

This financial situation in Greece is deteriorating rapidly and it could have widespread effects. Story here.

There are also fears the troubles could spread. The PIGS (Portugal, Ireland, Greece, Spain) are in obviously in trouble, but debt levels are sky high in countries typically considered more solid: Italy is at 127 percent and Belgium at 105 percent. Austria’s banks have troublesome exposure to recession-hit Eastern Europe.

As well, Greece, along with Portugal, Spain and other countries with deficit trouble, may find that unions and voters push back against cutbacks that will take years to show results. With a potential public backlash, their chance to win approval for such measures remains unclear.

And yet their response seems to be typical – more taxes. Like the US, this is NOT a revenue problem – it’s a spending problem.

Finance Minister George Papaconstantinou says a new tax bill to be presented this week will expand the top 40 percent tax bracket to incomes below the current euro75,000 ($102,000) threshold. He hopes to raise nearly euro4 billion in extra taxes this year, and an additional euro1.2 billion from a crackdown on the country’s notorious tax evasion.

This is socialism, folks…

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