The news media’s fixation with debt relief crowds out any serious discussion of the spending binge that has saddled Greece and its EU neighbors with enormous financial challenges. The reporting here from the New York Times puts all of its weight into the political maneuverings on both sides of the Atlantic without highlighting the imploding government programs that will beset future generations...
Germany is already working in concert with other European Union nations to bailout Greece from its debt problems, but they must redouble their efforts President Obama has declared in his communiqués with international leaders, a New York Times piece explains.
The pressure is mostly focused on German Chancellor Angela Merkel who has sought limits on the size and scope of the relief package. The report does an effective job of exploring the political dynamics that exist between the U.S. and their European counterparts. Unfortunately, it overlooks some of the long-term dangers now folded into the American economy and the key lessons that can be learned from EU missteps.
“Weeks of hesitant half-steps to address Greece’s debt problems had only worsened market worries about the euro, and were threatening the still-fragile economic recoveries in the United States and Asia,” the report says. “Now, Mr. Obama told Mrs. Merkel that the Europeans needed an overwhelming financial rescue to end speculation that the euro — and European unity — could crumble.”
In a phone call, Obama told Merkel that current efforts amount to half-measures that would not be able to stop the economic slide. Put another way, $1 trillion is not enough. As it was, Merkel was already under pressure from European leaders who supported an expansion of loan guarantees. The European Central Bank also figured into the equation much to the consternation of its own board members. The ECB has agreed to buy up sovereign debt of the weakest euro zone members.
“After the 16 leaders of the euro zone met Friday evening into early Saturday to confirm their previous deal for Greece, which the markets had considered inadequate, they agreed they had to do more,” the report says. “Their finance ministers gathered Sunday in Brussels, under a deadline to act before financial markets opened in Asia on Monday morning, to hammer out the details.”
While Europe’s missteps are well-documented, there is something in the way of irony that does not find expression here. America has its own unsustainable entitlement system, which is likely to implode within the next few decades, if not sooner. The ticking time bombs of Social Security, Medicare and Medicaid could trigger a financial crisis far worse than what now grips Europe. If America goes under, the current international order loses its linchpin.
Unfortunately, this latest report from The Times remains fixated on the bailout mentality that overlooks government spending binges that saddled posterity with unprecedented financial challenges.
There’s good opening here for an enterprising reporter inquire about deficit spending on both sides of the Atlantic. Instead of stepping to subsidize reckless public policy, shouldn’t the U.S. be arguing in favor more parsimonious spending habits and a radical restructuring of entitlement programs that could drown out any future savings?
Unfortunately, the concept of government intervention remains sacrosanct. Here is how the American position is reported:
“American officials became worried about the European response as early as February, a senior administration official in Washington said on Monday, when European leaders repeatedly stated that the Greece problem was well contained,” the report says. “They believed that mere expressions of support would be enough to calm the markets — and that they did not need to put in real commitments of emergency funds.”
U.S. officials are convinced their EU counterparts “waited too long” to take decisive action, according to the report. “Had they acted sooner they might have gotten away with less,” one American official is quoted as saying.
“The United States officials began talking to their counterparts about an American concept: overwhelming force,” the report continues.
Once again too much time is spent on the political gamesmanship and without any serious policy analysis. The radical 18th century idea of limited government and restrained federal activity would go a long way toward restoring the U.S. and EU economies to their proper station.
But from the perspective of the New York Times, these concepts are outdated.
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