While banks and European leaders hold abstract talks in foreign capitals about the impact of a potential Greek default on the euro and the world economy, something frighteningly concrete is under way in Greece: the dismantling of a middle-class welfare state in real time — with nothing to replace it.

Since 2010, the government has raised taxes and slashed pensions and state salaries across the board, in an effort to rein in the bloated public sector that today employs one in five Greeks. Last week, the government announced it would put 30,000 workers on reduced pay as a precursor to possible termination and would cut pensions again for nearly half a million public-sector retirees.

Questions:
1. The article mentions raising the value-added tax.  What is a value-added tax?  Does the U.S. have such a tax? Should they?  Discuss.

2. Ms. Firigou received a pay cut last year.  What percentage pay cut was it?

3. How does this financial crisis impact the U.S.?  What is at the heart of this crisis?

Source:

Donadio, R. (2011) Worried Greeks Fear Collapse of Middle Class Welfare State. The New York Times, September 24 (Retrievable online at http://www.nytimes.com/2011/09/25/world/europe/as-welfare-state-collapses-greeks-suffer-and-fear-future.html?pagewanted=1&_r=3&hp)