We in the United States know that we have a deficit problem, but when
we hear news of the ongoing crisis in Europe, we feel a little better.
At least we’re in better shape than Greece, Italy, and the other
Eurozone basket cases. Aren’t we?
Think again. By one key measure of fiscal health, the structural primary balance (SPB),
are in worse shape than any EU country. In fact, among the members of
the OECD, only Japan is deeper in deficit as the following chart shows.
Not just Greece and Italy, but even the Portugal, Ireland, and Spain,
the other derisively styled “PIIGS,” score better better than the
United States on this chart. That does not mean that their economies are
in better shape overall. They have a lot of problems that we do not,
which we will come back to later. What their structural primary balances
do show is how far they have come in making the fiscal adjustments
needed to make their budgets sustainable in the long run . The United
States has barely started those adjustments, and Japan has not even
thought about them. Let’s look more closely. >>>Read the full post here
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