Pay attention to Greece (but not too much attention)

So the European Union has just written a 145 billion dollar check to bailout the bankrupt nation of Greece. What can we take away from it? How can the United States learn from one government's total financial failure, asks Scott Hennen, a radio broadcaster at WDAY in Fargo, North Dakota.

We [the US] are not Greece:

Greece consists of only 2 per cent of the entire European Union economy.

We have single states in the United States with a larger gross domestic product (GDP) numbers than Greece.

Take some of those states – the ones with high deficits (New York, Illinois, New Jersey and California, for instance) – and compare their debt to that owed in vulnerable EU countries like Greece as a percentage of the GDP.

Debt to GDP ratios in high deficit states were below 15 per cent during 2009, while this ratio was well above 60 per cent for vulnerable EU countries, including Greece.

Punishing interest rates as a condition of EU membership guidelines further accelerated Greece's financial woes to the point of default; we don't have to worry about that here.

If we're going to learn anything from what Greece has taught us, it must be to limit the scope and power of our federal government, says Hennen. Greece got into this mess because it was a toxic environment for any free market enterprise.

An international study measuring the overall ease of doing business found Greece 109th out of 183 countries in the world, ranking worse than such bastions of economic freedom like Egypt, Zambia and Rwanda. It's an economy dominated by corrupt bureaucrats and powerful public unions, high taxes and onerous regulation. In essence, it's the model of the welfare state, says Hennen.

Source: Scott Hennen, Pay attention to Greece (but not too much attention),, May 18, 2010.

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First published by the National Center for Policy Analysis, Dallas and Washington, USA

FMF Policy Bulletin/ 01 June 2010
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