My latest op-ed for the Providence Journal is now available online. I discuss the crisis in Greece and the lessons it holds for the United States.
Read it online at Projo.com, and join the discussion there!
International headlines have recently focused on Greece, one of the 16 countries in the European Union whose currency is the euro.
Greece is in danger of defaulting on its national debt. The reasons are obvious: too much spending and not enough tax collection. The Greek budget deficit reaches 12.7 percent of its gross domestic product and its national debt represents 113 percent of GDP. These numbers are worryingly similar to our own balance sheet, with debt equal to 73 percent of our GDP (but growing fast) and budget deficits at 10.6 percent.
Greece’s potential default has sent shockwaves through global bond and stock markets, which could end up equaling or even dwarfing our subprime housing and banking crisis. As a result, the U.S. dollar has strengthened against the euro and the interest buyers demand on Greek bonds has gone up. A few other E.U. countries, perhaps most notably Spain and Portugal, are also in trouble because of their uncontrolled borrowing and spending.
Subscribe