Cutting back not enough for PIIGS

The paragraph below is excellent at describing the real problem with Greece and the PIIGS - it's competitiveness, not just spending and debt. The same could be said of the US today. Without a competitive engine no deficit reduction measures will bring the country back to health by itself - one can't starve themselves back to health. And the only ways to create wealth is to build something, grow something, or mine something. The only free lunch comes from the energy of the sun. If companies and consumers are willing to use slave labor, no pollution controls, poor working conditions with no recourse, etc., by outsourcing to China, India, and others, then the competitiveness of the West will continue to decline in competitiveness. Collapse is coming for the PIIGS, Europe, Japan, and the US.

If you're really good at making a pigs ear of things, why not join the EU? Of course, this is not meant as a piece of solid advice, rather it is a cry of frustration at being impotently forced to watch so many things done so badly, each in turn, and one after the other. Southern Europe's problem is essentially a competitiveness problem, and not a fiscal one, and if many states have been having growing difficulty with their negative fiscal balances, this is a symptom of the problem, and not its cause. Even in the worst of cases - countries like Greece and Portugal - the rising recourse to fiscal outlays has been a response to lack of "healthy" growth, and the root cause of this continuing difficulty in generating real growth has been the underlying lack of competitiveness, and the inability to export your way out of trouble once the burden of debt starts to rise, so simply pruning the fiscal side isn't going to cure the problem, and by now that simple point should be obvious, I would have thought.

http://globaleconomydoesmatter.blogspot.com/2010/03/why-not-unravel-imf-too-while-were-at.html