Retiring at 53 after receiving 14 months pay for every 12 worked and walking away with 80 percent of your salary for life. Sounds good, right? This is the way it was in Greece—but not any longer. All good Kool-Aide parties eventually have to come to an end. Greece has been living beyond its means, but apparently they like it that way. When EU member countries required large Greek government spending cuts and tax hikes as a condition of the bailout, all hell broke loose. Groups of masked individuals threw gasoline bombs at riot police as nearly 50,000 striking workers and public servants marched to parliament chanting, “thieves!” I’m surprised they found it necessary to announce themselves!
Ah, socialism at its finest! Ain’t it grand?
Calling it the Greece Bailout is really a misnomer. What’s really going on here is that we are bailing out European Banks because they are holding a lot of Greek debt and they are what? You got it; they are just too big to fail. Perhaps in a year or so they will bask in huge profits like Goldman Sachs, Deutsche Bank and Morgan Stanley among others. Meanwhile, tax payers from around the world will foot the bill.
The U.S., along with 186 other countries, is a member of the International Monetary Fund. The U.S. foots 17.5 percent of the IMF burden and in the case of the Greek bailout; our share is $50 billion.That’s rather hard to stomach with a 9.9 percent unemployment rate and a debt of our own hovering just under $13 trillion. Grecian politicians spent so much money that their annual debt service is equivalent to 124 percent of their gross domestic product. Sound crazy? It is, but the U.S. isn’t far behind them with an annual debt service cost at approximately 93 percent of our gross domestic product.
This is all relevant to the casino business. The leisure entertainment industry is dependent upon a customer base of prosperous gainfully employed people who can afford to entertain themselves by vacationing to a casino resort destination. The recession of late 2008 and absolutely every painful second of 2009 has left the U.S. economy run down and wore out. It put the squeeze on the number of gainfully employed people and as a result, the number of visitations at casinos in the U.S. dropped significantly.
Recently, visitations as well as gambling spend have rebounded slightly. It’s a start, but we need to be realistic about the road ahead. Good times can be here again, but we need to develop self-discipline and fiscal responsibility. The U.S. economy is strong and vibrant, but it needs a level playing field.
The U.S. Treasury has been in avoidance mode when it comes to dealing with our own deficit spending. Most of our nation’s debt is short-term, meaning it matures in less than three years and must be rolled over. Interest rates are likely to be much higher in the coming years resulting in painful budgetary stress. The cost of the interest alone on the national debt is projected to rise from $200 billion this year to more than $700 billion in 2019. This is a critical situation which could quite possibly curtail the U.S. recovery. The interest rates on our short term debts are similar to an adjustable rate mortgage that has very low interest rates the first few years then the rate is adjusted substantially higher later. It is time for fiscal leadership in Washington, or we are all going to pay a very painful price.