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Home Publications Blogs Beat the Press Who Are the Unnamed People Who Think the United States is Greece?

Who Are the Unnamed People Who Think the United States is Greece?

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Friday, 23 April 2010 05:12

That's what readers of a Washington Post article on the possibility of a default by Greece might be wondering. The Post told readers that:

"Other large nations, including the United States, that carry increasing levels of debt have worried that the Greek crisis could be a small-scale sketch of their own future. Sovereign debt is coming under increasing scrutiny by global markets, and many analysts fear that U.S. government bonds are not as attractive as they once were?

Of course "nations" cannot worry, only individuals within nations can worry, but the Post doesn't identify any who do. Nor does it identify the "analysts" who are finding U.S. government bonds less attractive. These analsysts are apparently offset by analysts who continue to view U.S. government debt as a very attractive asset since the yields on U.S. government bonds remain extremely low.

If there was an interest in making comparisons to Greece it would have been useful to remind readers that the United States government, unlike the Greek government, can print as much money as it wants to finance its debt during a period of economic weakness like the present. It also has a large diversified economy which is still largely self-sufficient, unlike Greece.

These differences make the comparisons to Greece highly inappropriate. While there may be people who make these comparisons as the Post claims, these unnamed individuals probably have little knowledge of economics.

Comments (3)Add Comment
...
written by izzatzo, April 23, 2010 7:38
The yield curve is thinking,
That debt is not shrinking,
And could be perverted,
To become inverted.

If dollars were euros,
And could not be printed,
The US would be Greece,
Facing default and blinking.
...
written by PeterMarlow, April 23, 2010 12:39
"These analsysts are apparently offset by analysts who continue to view U.S. government debt as a very attractive asset since the yields on U.S. government bonds remain extremely low."

But let's face it, the Fed IS manipulating rates--downward. And so we cannot blindly trust the low Teasury rates as being the "don't worry" signal that you're suggesting it is.
Historical Perspective
written by cas127, April 23, 2010 2:14
And where were Greek rates at one or two years ago?

Everything looks fine until savers/creditors get sufficiently sick of habitual fiscal degeneration and decide to stop "rolling-over" for it.

In the end, the only thing that *really* makes for a reserve currency is a belief in it.

And if you want an example of just how quickly faith in real world "belief systems" can evaporate - ask the Soviet Union.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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