‘Grecian’ debt crisis baffling for U.S. with its own crisis
There was a time when an escalating debt crisis in a far-away place like Greece would probably seem remote to the good people in the U.S. of A. during doggish summer days like these.
That anyone is even talking about the impacts of Greece’s debt position on the American economy speaks to the inextricable interconnectedness of the world’s financial markets these days.
We have come a long way. Heck, it seems like just yesterday that Greece was of such little presumed importance that a presidential candidate named George W. Bush referred to her citizenry as “Grecians.”
Today, Greece is so hyper-visible on the evening news and elsewhere that, according to a non-scientific poll commissioned by me, 7 in 10 Americans know Athens is Greece’s capitol, 6 in 10 Americans know the term is “Greek” not “Grecian,” and 10 out of 10 CNBC viewers know that the Grecians, er Greeks, are in such a fiscal mess that even European Socialists are lecturing them on the need for budget cuts and fiscal austerity.
I’m not really sure what to make of all the competing predictions about what a debt default in Greece means for the United States’ fake economic recovery. I’ve heard some say that our financial super-structure isn’t closely linked to the impending or apparent or threatened (or whatever you want to call it) Greek debt default, and thus the United States will be fine either way. Other credible economist types have said a Grecian default is a first domino that could topple other European dominos that, in turn, could ultimately topple the American economic recovery domino. Thus, these learned types contend, much is at stake for the United States in Greece.
Earlier this week Ben Bernake over at the Fed took the side of the latter, contending that an Athenian default would be calamitously disastrous for us all.
Bernake might be right. Come to think of it, Bernake must be right. On a simple statistical basis, where dumb luck and blind fortune are fully weighted, Bernake has got to finally be right about something. I’d support a quantitative easing of Bernake’s employment.
The more I’ve thought about it, though, the more I think that the whole thing will, in the end, turn out to be much ado about nothing for those of us stateside.
There’s no way the Greeks don’t get a European bailout. If it gets to the point where the Greek’s run afoul their debtors, the Euros will rally together like good western Europeans do — come on, you know they will.
Sure the “fiscal hawks” over at the IMF are demanding government spending cuts out of the Greeks as a pre-condition of future bailouts. And sure, that’s what’s got the mob of spoon-fed socialist welfare monkeys rioting in the streets. Tough pickle in Greece-land.
How exactly the Greeks react and govern in the face of all this, it’s hard to say. But either way, I bet they’ll get their bailout. And while I personally don’t like bailouts, better the working stiffs who call themselves “taxpayer” in the Euro zone than me.
I guess if there’s anything that gives me pause in all this, it might be the fact that the train wreck of government inaction that has marked Greece’s response to its debt crisis looks a lot like Washington’s hapless handling of our own federal budget blues.
Fortunately for Americans, Greece’s debt crisis is far, far more advanced than our own insignificant federal accounting imbalance. Greece’s mountain of debt equals 150 percent of its entire annual economic output. America is in much better fiscal shape. Our debt load is only 75 percent of our annual GDP. Pikers, we are.
Sure, that doesn’t factor the $100 trillion in long-term liabilities we have to Medicare and Social Security, but the dog days of summer are no time to quibble about such insignificant accounting distinctions as that.
Yep, I can’t help but feel bad for the Greeks, but I guess it’s better them than us.
Josh Penry is a former Colorado Senate minority leader and a graduate of Grand Junction High School and Mesa State College.