This business of seeing American debt in the mirror of the Greek debt crisis is the new distortion:
Despite last year’s bailout, debt in Greece continues to grow, and Athens is asking for another rescue package. As America nears the deadline to raise its debt ceiling, it should review its Greek lessons.
Greece is in deep debt problems not because of its debts but because it’s a small and weak country. The US is not in anyway the same species of debtor as Greece. One can bully; the other cannot; one has “the bomb,” the other doesn’t. To act as if US and Greece are the same type of debtors is to pretend as if their access to violence is the same.
If the Pentagon suddenly collapsed, only then would we see a real change in how American debt is viewed. So, the comparison between Greece and US serves just one purpose: to protect the American rich from taxes by cutting the government’s remaining, non-violent social commitments.
The Greek debt problem, on the other hand, reveals a truth: A nationality (the EU in this case) cannot be realized by market forces alone. The EU will never be a US because the US is not the dollar first. This line of thought is in development; I will have more to say about the euro and European nationality in the future.
Greece has a debt problem because they borrowed in a currency they don’t control. The US doesn’t do that. And the problem is really for Greece’s creditors.
In Greece nobody pays their taxes either.
Greece has a debt problem because it is (and has always been) rampant with corruption, cronyism, and fraud.
It’s funny because it’s true.
I’ve long parried ‘Our money is backed by _nothing_!’ with ‘No, it’s backed by nukes.’
Anyway, it doesn’t matter why “we don’t have any money” so long as that condition is trotted out whenever we’re tempted to disobey God by helping some damn loser get ahead like a normal person, or just not starve.
Greece’s debt problem is by design. The Euro means to rob its members of the right to decide the fair wages of their workers.
Without the ability to control their own currency, Greek politicians cannot continue to reward their labor at rates higher than the stingiest of other Euro members.
@5 — and the most productive work force in the history of the world.
And a wealth of natural resources.
And nukes.
@1+ @2+ @3 = The problem exactly. The EU and the euro forced Greece into a position where that corruption completely destroyed their economy. And since they don’t have enough of a tax base, and can’t work the fiscal wizardry on their currency. . . they are SCREWED.
The American economy is not only not broken, it’s doing exactly what the people in power want it to do. The rich are getting fabulously richer, and the poor are getting poorer.
Charles,
Not to be nitpicky, but you really can’t have an EU “nationality”. Nationality is membership of a nation. It’s what gave rise to the concept of nation-state. That concept, as opposed to kingdoms, loose confederations, and supra-states like the Holy Roman Empire, is what has shaped the world for the past several hundred years.
One doesn’t have to have a sovereign state to have a nation. The Kurds have a nationality. But not all sovereign states are nationalities. The US = nationality. The USSR = state composed of many nationalities.
Greece fits the definition of nationality, the EU does not. You can speak of the Greek nation, you can’t really speak of the EU nation. That’s the problem.
I’ve a lot of friends who work in European national governments and in the EU. There’s a huge issue with shaping an EU or European identity that’s not just an amalgam of the various nations or an “anti-US” state. There was a time where the real effort in building up the EU and the sense of Europe was not based on positive identity, but rather the concept of “not American, not Russian”. Negative identities can get a group going, but do not sustain it long.
Like it or not, there is something called being an “American”. While we may disagree violently, you and I do have something in common with the poorest miner in Kentucky. The problem in the EU is that there isn’t the common threat between the gay man in Stockholm and the poor goatherder in the Greek islands.
This is the entire problem with the common economic system of the EU. You see this with the Greek debt. The French and Germans don’t want to bail them out. E-coli breaks out in Germany? Blame those dark Spaniards for poisoning the food supply.
In contrast, we may not love each other, but when one state is hurt, others help, either in taxes paid to the feds or direct aid. While the federal government’s response to Katrina and it’s current response in Joplin is horrendous, I don’t hear anyone in Cali talking about disbanding FEMA because “those people” deserve it. OK, maybe some nutjobs think that way, but it’s not a widely held opinion
Pithy,
I’ve heard French and German officials talk about how they never wanted “those Greeks” and they will die before “those Turks” get in.
Not really one big happy family.
A post of interest at the Washington Note:
The Germans are trying to do with banks what they couldn’t do with tanks – dominate Europe – starting with the smaller and weaker countries like Greece and Portugal.
Greece’s problems are (1) a surplus population that leads to massive unemployment (up to 40% among workers under 30) and emigration (in my grandma’s time to the US, now to Australia), and (2) an economy based on tourism and export of agricultural commodities that leaves the country unusually vulnerable to world economic trends.
Andreas Papandreou (the current Prime Minister’s father) tried to solve these problems by stimulating internal markets through raising wages and pensions, and lowering the retirement age to 55. These policies were inflationary, but successful in producing a level of domestic prosperity unparalleled in modern Greek history.
The EU and IMF are now forcing Greece to undo this progress in the name of fiscal responsibility.
Greece(and Portugal) have one advantage the US doesn’t. As very small countries that use mostly local resources, they could do an Iceland/Argentina: a national “strategic default”. Fuck the banks and walk away from the debt, like a homeowner with an underwater mortgage.
After a couple of (very)hard but survivable years re-emerge with the world economy dying to do business with them again. Banks, corporations, and plutocrats walk away from debts all the time*. Only ordinary individuals, small businesses, and less developed countries feel like they have a moral obligation to pay off unsustainable debts.
*Or get the US, German, and UK governments to bail them out, no strings attached.
@12 – Agreed.
Krugman covered this topic fairly extensively. With no flexibility in foreign exchange rates due to German dominance of the Euro, Greece cannot devalue its way out of economic problems like Iceland did.
@17, If Greece defaults and gets out of the euro and goes it with its own ghetto depreciated currency, the drachma, won’t their exports-if they can develop some tangible goods and services to export–become competative and allow them to dig themselves out of their financial debt hole?