Which Country Will Force Fiscal Restraint On The United States?
Germany’s Prime Minister, Angela Merkel, was in the news today defining the conditions upon which Germany would provide financial assistance to Greece. Included in the list of requirements is a plan of action in which Greece would need to reduce its spending deficit and implement a viable savings plan. Here’s the link: Conditions For Greece Bailout.
While I fully expect that ultimately Greece will be bailed out by a combination of the EU and the IMF (aka the U.S. Fed/Treasury/Taxapayer), it also appears that Germany is going to force Greece to implement a well-delineated plan of fiscal austerity, which will also require some material sacrifice from the Greek populace.
Having said that, I continue to be highly amused at the all the attention Greece is getting, which seems to be nothing more than a big Orwellian smoke screen designed to cover up the massive fiscal/financial timebomb called the United States. Greece contributes 3% to the overall EU GDP. It has about $400 billion in Government debt. On the other hand, California represents 13% of U.S. GDP, is the world’s 7th largest economy, and with close $600 billion in State/Municipal debt, and not including the State Pension that is underfunded by $500 billion, and is so hopelessly insolvent and in fiscal distress that it makes the Greek problem look like little more than a global economic toothache. And that’s just California…
So, my question is, if Germany has the leverage to force some financial/fiscal discipline on little Greece, which country out there can do the same to the U.S.? The problem here is that eventually the market will impose its will on our country – and that will yield results that will be exceedingly more painful than most people in this country understand….Got gold?