FACT: Greece, along with the other so-called PIIGS countries of Portugal, Italy, Ireland and Spain, have large budget deficits, but that is to be expected after a global economic collapse in which “prime the pump” government spending is playing a key role in stimulating the economy.
While alarming, Greece’s deficit at 12.7% is not that much higher than the U.S. or Japan at 10.5%. True, Greece has a sizable accumulated debt over many years, estimated at about 110 percent of its GDP, but even the US has a debt estimated at 94% and projected to break 100% by 2012. The euro zone, on the other hand, has a fairly low deficit by today’s post-collapse standards, only 6%.
California actually is more worrisome than Greece in certain ways. Greece’s economy comprises only 2% of the European economy (about the same as Indiana’s to the US economy). But California, which has had to issue IOUs to pay its mounting debts, makes up 14% of the US economy (about the same magnitude as Germany’s economy in Europe).
Having a state that is one-seventh of the national economy in dire straits is a threat to the nation’s economic recovery. California is “too big to fail,” yet the Obama administration has refused to bail out The Golden State, despite requests from Gov. Arnold Schwarzenegger for assistance. Meanwhile, Germany and France have pledged to stand by Greece during this difficult time in return for Greece’s efforts to cut its deficit.
– Steven Hill, guest blogger
You can see all the posts in this series here.
Steven Hill is the author of “Europe’s Promise: Why the European Way is the Best Hope in an Insecure Age” (www.europespromise.org). He’ll be visiting Seattle and Bellingham next week:
- Monday March 15 at 11 a.m., interview on the Dave Ross Show, KIRO 97.3 FM
- Monday March 15 at 7 p.m., presenting at the University of Washington Communications Building
- Tuesday March 16 at 7:30 pm: presenting at Town Hall Seattle (tickets here)
- Wednesday March 17, 7:00 p.m.: presenting at Village Books, Bellingham