What Greece and the US Need to do

Peter Morici writes a contributed column at The Street which explains that Greece must abandon the euro and go to another currency like the drachma it used to have in order to allow it to devalue its currency against the euro and other currencies. It is worth noting one interesting benefit to strong exporters in Europe such as Germany is that a common currency allows them to sell to weaker countries like Greece through subsidized monetary policy. Basically, because of the euro, the Greeks can buy a BMW more inexpensively.

In other words, Greece consumers benefit from the euro the same way the German manufacturers do. The challenge of course is that Greece does not have as productive an economy, they have more tax evasion than they should and since their currency isn't dropping in value commensurate with their financial situation, they aren't able to boost tourism or the value of their exports.

The sad reality for Greece and the US is in the following paragraph:

The only real solutions are for Greece to restructure its debt -- both sovereign and private creditors should take haircuts; abandon the euro and reinstate the drachma; and rethink its welfare state. Like Americans, the Greeks will have to work longer to retire and accept other less generous social benefits, but they could reassert control over their economy.

Sadly, Democratic politicians - especially those like Howard Dean are attacking the very measures needed to bring the US spending under control in order to prevent a debt-induced implosion in the US. Listen to him speak and twist words below - this interview took place this morning. Rather than admit the federal government is close to broke and none of of our future programs our sustainable when a government is borrowing 40% of every dollar it spends - he attacks responsible people like Paul Ryan. You may remember, Ryan proposed a budget which has the potential to help the US remain solvent and subsequently will protect all government programs. He would be the perfect president for the financial problems this country faces and I really hope he is convinced that he should run.

Moreover - Dean says many Republicans are haters - of gays, immigrants and anti-Muslim which is just plain untrue - unless you make up your own facts. Then again, many X are haters of Y is a tough statement to disprove - it is a talking point meant to diminish the importance of the message from the political opposition.

Sadly - in this case the political opposition is warning the country we have a spending problem which is about to cause the nation to go into insolvency if not resolved. President Obama has even agreed with this statement but he seems happy to pass the problem onto an administration in the future. Sadly for US citizens - we have no one to pass the problems onto - we are stuck with them.

You could call Howard Dean a liar - or just accuse him of omitting the facts but either way it is an example of a smooth-talking politician who doesn't seem to care one bit for his constituents - or the country.

One last point - can someone - please someone ask Howard Dean, President Obama and/or Nancy Pelosi - in their view just how is the Greek debt crisis different than the US - and what makes them think that if we don't change course we won't end up as screwed as they are - not to mention Portugal, Spain, Ireland and Italy who are also living beyond their means.

If you see the obvious similarities between the US over-borrowing and what is happening in Europe - attacking budgets which reduce spending would make you fiscally suicidal. And to be honest I am beginning to believe "fiscally suicidal" is the dictionary definition of liberal - I have yet to find one who can reconcile their love of spending and taxing with the reality that there isn't enough money in the country to continue spending the way we are.

-- Written by Rich Tehrani
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