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There's been some comparison in the popular press between Greece's serious fiscal condition, and the State of California's. Well, while both are running budget deficits, the similarities stop there. Greece's fiscal situation is far more serious. Greece's budget deficit as a percent of GDP is roughly 12.7%. California's is about 7%, based on the state's 2008 GDP.
Second, California's private sector-based economy is, for the most, a microcosm of the dynamic, and technologically-advanced U.S. economy, which, historically, has shown a remarkable ability to adapt, and to discover new engines of growth. Greece's mostly-socialist economy, while having stronger social supports, has not been nearly as flexible as California's economy.
Finally, California has as a back-up the U.S. government. And Greece? Statutorily, there is none. Euro-zone members are not obligated to help Greece as it attempts to cut spending and raise taxes/fees to reduce its deficit.
Fiscal/Economic Analysis: Some may try to draw parallels between the two -- view those observations for what they are: rhetoric. Also, concerning Greece, although euro-zone members are not required to help Greece, look for the group, led by Germany and France, and possibly in conjunction with the International Monetary Fund, to ease Greece's transition to fiscal austerity. Germany and France aren't thrilled about bailing-out Greece, but the last thing the two and the IMF will tolerate is Greece's fiscal difficulties rippling across Europe, jeopardizing trade and GDP growth, and roiling the financial markets again, at a time when they're just starting to come back to life.
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Reader Comments (Page 1 of 1)
2-08-2010 @ 4:58PM
John said...
This is nonsense. "Tech" is a bunch of digiclerks whose work evaporates at the first sign of economic trouble.
The recession has not even started yet in California. We are a true basket case.
The CDS hurricane has simply touched down in Greece. It will travel all the way up the economic coast to the U.S.
Why? Because its target is the U.S. It knows the U.S. economy is dead. Why don't you?
2-09-2010 @ 12:08AM
chex781391 said...
California is the tip of the iceberg. The worst has yet to surface, sorry to say. The goverment is now facing China with an un-servicable debt and needs much more money to keep the "Night-Mare" alive, at least till after the next elections.
My predictions are: The DOW will continue to slide, the Fed will raise interest rates to service our debt at China's insistance, Major banks deemed once to large to fail will, Forclosures of both residential and commercial will sky rocket, Food prices will reach all time highs, Walmart will continue to thrive and last but least, Jobs will continue to evaporate.