We’re Not Greece … Yet

J.D. Foster / May 14, 2010

In his latest New York Times column, Paul Krugman manages to make some useful observations before slipping into his usual role of distorting propagandist.

His most important observation is in his title, “We’re Not Greece”. For that matter, we’re not Portugal or France, either, for all of which we can be thankful. Greece suffers from a quadruple whammy. Its fiscal policy is a disaster, with a debt-to-GDP ratio push rapidly toward 150 percent and beyond. Its political system is very shaky and its social fabric appears to be fraying judging by the strikes, mass marches, and gasoline bombs thrown at police. And to top it off, a perennially weak economy is now fated to suffer a massive contraction as the penalty for promising a standard of living to the Greek people that could only be maintained by government borrowing on international markets. For Greece, the jig is up.

So, no, we are not Greece. Our political system is no beauty, but it tends to work. Our society is under the inevitable strains of a big country with a heterogeneous population, yet we press on. Our economy should recovery smartly if Washington can stop throwing monkey wrenches into the operation. But then there’s the matter of the federal government’s finances (and state finances, but that’s for another day). (more…)