The debt crisis in Greece is the leading edge of global fiscal crisis in developed economies. In the EU no one really cares much about Greece (3% of EU GDP). They care about contagion spreading to the other members of the PIIGS: Portugal, Italy, Ireland, and Spain.
Fiscally sound Germany could bailout Greece, but could not afford to bail out all the others. Desmond Lachmann of AEI and Wolfgang Munchau of the FT (April 5th, p. 9)both forecast a Greek default as all-but inevitable. With that, the EU fractures.
Does anyone believe the contagion would not spread to the US. Where will the US cut? Surely in defense, but even eliminating all defense expenditures would not close the budget gap. Obamacare will be postponed indefinitely. Only the taxes will be implemented.
Sunday, April 11, 2010
Why the Eventual Greece Debt Default Will Lead to the End of ObamaCare
Jerry O'Driscoll has a theory:
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My concern with O'Driscoll's theory is that it treats fiscal discipline as if it were a virus. He states: "Does anyone believe the contagion would not spread to the US."
ReplyDeleteThe reality is its not a matter of will the US catch it or not. The ship has sailed on the lack of fiscal discipline. Now we must face the hard truths that the government's entitlement programs are failures and the transition to reality will be painful. Millions of people will be rationed out of their retirement and rationed out of their health care before this is over.