Greece 2–The Domino Theory (Again)!Posted: 18 May 2010
International Studies Group
I have listened to all those nay-sayers that see our rising deficit as a problem that will turn the US into another Greece….but is it possible that the US could face the same problems as Greece? In the 60′s there was a popular theory, the Domino Theory, that stated that if one country in Southeast Asia fell to Communism, they all would….this is just an update of that old belief….if Greece goes, then Spain, Ireland and Portugal will follow…and because of a global economy and the rising debt in the US…it will fall too…..
According to David Leohardt of the NY Times:
The numbers on our federal debt are becoming frighteningly familiar. The debt is projected to equal 140 percent of gross domestic product within two decades. Add in the budget troubles of state governments, and the true shortfall grows even larger. Greece’s debt, by comparison, equals about 115 percent of its G.D.P. today.
But how accurate is that analysis? Personally, I do not think it is that accurate….I feel it is just a conserv way of using the fear card yet again…..Greece is NOT having any form of recession recovery…the US is…while it might not be a great recovery, there are still signs of the economy trying to make a come back…..Greece is having NO such activity….
Yes the deficit is high and needs some control, but I do not see it banging the country down like that of Greece…as Paul Krugman wrote in the NY Times:
The U.S. economy has been growing since last summer, thanks to fiscal stimulus and expansionary policies by the Federal Reserve. I wish that growth were faster; still, it’s finally producing job gains — and it’s also showing up in revenues. Right now we’re on track to match Congressional Budget Office projections of a substantial rise in tax receipts. Put those projections together with the Obama administration’s policies, and they imply a sharp fall in the budget deficit over the next few years.
The US is NOT Greece! For one thing Greece does not have its own currency that it could manipulate to help the problem, which would be one way to help, but instead they, Greece, will suffer through years of zero growth and massive cuts in services. One reason is the Euro. If you notice that the countries that are having the most problems, Portugal, Spain, etc have NO other currency other than the Euro….something to consider.