Thursday, May 17, 2012


I am still fascinated (in a slow down to see the car wreck kind of way) by what is happening in Europe.  There are new fears of a spreading panic as depositors rush to withdraw their money from Greek banks.  The cost of a potential Greek exit from the Eurozone is also starting to sink in, with one financial big shot saying it could be up to a TRILLION dollar proposition.  This cannot be a good thing for our economy, as Europe remains our largest trading partner.  The crisis is getting to an acute stage where European Union and European Central Bank officials may have to make a move before new elections are held in Greece in just a few weeks time.

All of this leads Victor Davis Hanson to reflect on how the Germans might react.  He argues that, in the past, Germany lashed out at Europe from a sense of isolation and grievance.  Today, Germans are being made to feel guilty about their solvency and success, and being told they are responsible, using their hard-earned money, for bailing out their profligate European neighbors.  Hanson thinks this will not go down well with the Germans.  I think he is quite right.  The only way the Greeks, Italians, Spaniards and others will get more German money is if they obey German rules.

Meanwhile, here in the U.S., our own economy is not in such great shape, as these three charts indicate.  But it is this handy chart from NPR that tells the tale of our current predicament.  Federal spending is growing by leaps and bounds because health care spending is growing by leaps and bounds. Until we solve that problem we cannot solve our debt and deficit problem.


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