Greece is near default on its sovereign debt as a result of budget deficits of (now reported) 16% of GDP. Greece is a “state” in the EU. Let’s see how US states are doing:
- California- deficit is 22% of state GDP. (Note as well that California by itself is the 8th largest economy in the world.)
- Florida- 19.9%
- Arizona- 19.9%
- Nevada- 16%
Some differences between the approach of the EU and US:
- It appears today that the EU will NOT bail out Greece. Instead the dirty work will be left to the IMF.
- In any case, the EU was requesting strong austerity measures from Greece.
- In the US, there has been almost no discussion FROM EITHER POLITICAL PARTY about the wisdom or sustainability of state government bailouts. There have been NO calls for any cutbacks.
One last note- if the IMF steps in, then the USA will once again be bailing somebody else out. Remember that last year, Congress approved another $160 billion of guarantees to the IMF. The US contribution to an IMF bailout of Greece will be about 17% of the total.
Why is it that the US has to step in when the most interested parties- the Europeans- won’t? I suggest that we get the IMF to bail out California!