EUROPE ON US FISCAL CRISIS

economist sphere

“Imagine you are in a taxi and the driver suddenly turns violently and speeds towards a wall, tires screeching, only to stop at the very last moment, inches from the bricks — and cheerfully informs you that he wants to do the same to you in three months time.  Would you be grateful that he has not killed you? Or would you wonder why you chose his cab in the first place?  This is the journey Congress has taken the American people on over the past few weeks.

“….the country’s long-term fiscal problem is immense: it taxes like a small-government country but spends like a big-government one.  Eventually demography — and the huge tribe of retiring baby-boomers who expect pensions and health care — will bankrupt the country.  By the IMF’s calculation, if America is to reduce its debt to what it regards as a sensible level by 2030, allowing for all this age-related spending, it needs a ‘fiscal adjustment’ of 11.7% of GDP — more than any other advanced country other than Japan.”

(“Worse than Europe, really”.  Economist October 19th)

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