Like every other commentator watching Athens burn, I searched for the proper mythological reference. Failing that, I quote Daniel Henninger in today’s Wall Street Journal, referencing the oil spill and the administration’s lame reaction to it:
“Imploding Greece and fretful Europe are not the United States. But they are portents. We have too-fat California and New York. We are getting there. People pay for government with taxes and want their money’s worth. But a government that gets too big is not going to be able to do big things when we really need it.”
Whatever help the IMF provides, after three years (the period of debt refinancing) Greece will still be at a debt-to-GDP ratio between 140 percent and 150 percent. As Jacob Kirkegaard of the Peterson Institute for International Economics noted in our interview last weekend, they’re just delaying the inevitable.
But wait. We’re repeatedly told government spending is the answer to our fiscal woes, whether in stimulus, job creation bills or whatever. Next time you hear it, remember the Pan-Hellenic Socialist Movement (better known as PASOK) is the dominant party in Greek Parliament. For the majority of their time in power, social spending, tax increases and artificial wage inflation were priorities (sound familiar?). We are now seeing the end result. No, imploding Greece is not the United States, but continue in the current direction, and we soon could be.