Krugman Is Wrong: The United States Could Not End Up Like Greece

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Subject:	FWC--Krugman Is Wrong: The United States Could Not End Up Like Greece
Date:	Sat, 26 Mar 2011 18:07:57 -0700
From:	Jas Jain <jas_jain

Dean Baker and Krooksman, born-and-bred American dopes and neo-Keynesian solutions peddlers, are in the propaganda business. One only needs to read them in order to monitor what harm an organized gang of rogue economists can do to America. Bernanke is one of them, but with power to do evil and he is fully exercising that power. Only a system designed for dopes would give that kind of power to one man. The same goes for Greenspan, GW Bush, Obama, etc. American econo-political system has evolved into a very bad system for the people and very good system for the Crooks who control Bernanke and Obama. The outcome cannot be in doubt.

Jas

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http://www.cepr.net/index.php/blogs/beat-the-press/krugman-is-wrong-the-united-states-could-not-end-up-like-greece/print
Krugman Is Wrong: The United States Could Not End Up Like Greece
Friday, 25 March 2011 03:58
By Dean Baker
It does not happen often, but it does happen; I have to disagree with Paul Krugman this morning. In an otherwise excellent column criticizing the drive to austerity in the United States and elsewhere, Krugman comments:
"But couldn't America still end up like Greece? Yes, of course. If investors decide that we're a banana republic whose politicians can't or won't come to grips with long-term problems, they will indeed stop buying our debt."
Actually this is not right for the simple reason that the United States has its own currency. This is important because even in the worst case scenario, where the deficit in United States spirals out of control, the crisis would not take the form of the crisis in Greece.
Greece is like the state of Ohio. If Ohio has to borrow, it has no choice but to persuade investors to buy its debt. Unless Greece leaves the euro (an option that it probably should be considering, at least to improve its bargaining position), it must pay the rate of interest demanded by private investors or meet the conditions imposed by the European Union/IMF as part of a bailout.
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