Friday, April 6, 2012
Europs pain is coming Americas Way
This article tackles the debate of the enormous deficit that the United States is currently building. A deficit that according to the article that is about 10% of GDP and a debt that is roughly 100% of GDP. The question at hand is who will have to bear the tough times ahead, adults or their kids. This article attacks this question with some humor by referring to a young dutch boy who won a prize for entering a plan for getting the Greek economy back on its feet. This article points out three major factors, deficits do matter and sooner or later will have to be cut, trying to cut deficits in the middle of a recession only makes it worse, and when in fact the cutting starts it will cause massive social and political upheaval as well as pain. Comparison of the United States and Europe is important to recognize because Europe is feeling the pain that many feel will spread to the United States. So the question is, wait to attack the issue later and let future generations suffer the consequences or start to handle the situation now and help ease the pain of future generations by taking some of pain now. The issue is no one ever wants to suffer economically so, taking the cynical view, we will in fact pass it on to future generations since no one will step up and do the right thing.
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3 comments:
This is an interesting article to read. The issue about the U.S. debt has not been new. U.S. government has been building its debt since couple of decades ago. Talking about cutting debt now or pass it down to future generations, it is not even something to be debate about, but has seemed to be a dominant heritage policy throughout generations of presidency. It is a quite smart thing for the earlier government to do, since they got to use the money that they did not have, and won't worry about paying it back. However, no matter in what way or at what time, you have to pay back what you owe, because it is not yours. The problem is in what way and when. Once the astronomical debt was out of control, which has already been, methods of cutting debt will undoubtly destroy the current economic growth and even the luxurious lifestyle most Americans are enjoying. It definitely won't happen now, but whenever it is happening, associated domestic and international riot might be some rampant that people would not want to see.
This is an extremely tough topic. No one wants to deal with the consequences of tackling our debt but how long can we push it off. We see how much European countries have been struggling, especially Greece. So whether we like it or not action needs to be taken yesterday.
If we continue to put off the debt crisis any longer, than we will approach a situation like Greece or the other PIIGS countries. Their inability to budget and establish sustainable governmental spending has led not only to the Debt Crisis for the EU but also harsh austerity measures that the Greek citizens have been protesting. The US could approach a similar situation in the future.
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