I’m not an economist, but even I find stories like the following to be a bit unsettling.
First, there’s this announcement by US Senator Gregg (R-NH) that, “The United States wouldn’t even be eligible to enter the European Union if it wanted to because of its debt levels”.
For a visual representation of the projected deficit (which is only how much we’re adding each year to the total cumulative debt), the Washington Post has a nice graphic:
In the first independent analysis, the nonpartisan Congressional Budget Office concluded that President Obama’s budget would rack up massive deficits even after the economy recovers, forcing the nation to borrow nearly $9.3 trillion over the next decade.
Second, there’s this OpEd in the March 29, 2009 Washington Post which warns against an Argentina-style financial crisis in the US. Here’s an excerpt:
…Many economists and analysts are worrying that the United States might go the way of Japan, which suffered a “lost decade” after its own real estate market fell apart in the early 1990s. But I’m more concerned that the United States is coming to resemble Argentina, Russia and other so-called emerging markets, both in what led us to the crisis, and in how we’re trying to fix it.
Again, I don’t think that an Argentina-style collapse is the most likely scenario for the US.
But the fact that more mainstream analysts are mentioning this as a live possibility is not a good sign.
And of course, if you want to know what sorts of problems ordinary Argentinians faced (and how they coped), don’t forget this detailed essay which has been making the blogosphere rounds lately.
I sincerely hope the US never gets to this point. But it’s not outside the realm of possibility.