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May 13

What Does the Euro-Zone Crisis Mean for the U.S.?

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The Greek financial crisis has revealed the underlying weakness in the Euro-zone. A combination of government profligacy and inappropriate interest rates has resulted in the creation of an unsustainable debt burden and an uncompetitive economy. The creation of the Euro was always a political act, not an economic one, but it was predicated on the belief that European governments would be fiscally responsible. That belief has been shown to be wholly wrong. Even worse, Greece looks to be only the first of the dominos. The Spanish economy is far larger than that of Greece, and Spain’s position is as bad as if not worse than Greece. After Spain – Portugal, Italy, and Britain – all face extremely challenging situations stemming ultimately from their lack of fiscal responsibility.

The crisis in the Euro-zone is relevant to the United States partly because a sustained contraction in Europe would affect the U.S. economy, too, as well as U.S. interests more broadly. But it is also directly relevant to the United States. The financial contagion that has started in Greece is unlikely to stop there. The U.S. budget deficits, and especially the bills it is pilling up for Medicare, Medicaid, and Social Security, mean that the U.S. is also a plausible focus of concern for markets newly concerned about the ability of states to meet their obligations. Join us as our panel of economists discusses the financial crisis in Europe and its implications for the United States.

More About the Speakers

Desmond Lachman
Resident Fellow,
American Enterprise Institute

J.D. Foster
Norman B. Ture Senior Fellow
in the Economics of Fiscal Policy,
The Heritage Foundation

Ambassador Terry Miller
Director, Center for International Trade and Economics,
The Heritage Foundation

Hosted By

Theodore R. Bromund, Ph.D. Theodore R. Bromund, Ph.D.

Senior Research Fellow in Anglo-American Relations Read More