As the events in Europe continues to unfold and here in the United States, the public and the politicians become infatuated with debt reduction, the biggest casualty will be the social welfare state on which European and American economies take so much pride in will take a severe hit. It is already happening in Britain and the worse hit Greece but also other countries like Spain, Portugal, Ireland and even rich nations like the French, the Germans and the Americans have been forced to think of curtailing this lavish system of benefits which was going to get unfolded sooner or later. Besides competing with the likes of the lower labor rate countries of India and China, the social welfare rich states are also battling huge debts and shrinking populations to feed the longer living citizens in their countries.
I really could not understand how long were they (meaning these states) were thinking before they put at huge axe to their welfare payments. Right now these states are essentially borrowing money not only from future generations but also surplus funds from investors and other rich countries that are happy to get a hold on their debt. It is like piling more debt over already insurmountable debt which is not going to be paid anyway. I guess either there is going to be drastic cuts or complete elimination of all welfare benefits or they will declare bankruptcy and then there will be turmoil in the markets and in their respective countries. I believe that this social welfare is not sustainable anymore and it should either be curtailed or be paid fully with present money or even drastically reduced to make them viable and developed states again.