Today, the Savannah Morning News published the second column by Nicholas Mangee, a new assistant professor of economics at Armstrong Atlantic State University: How the U.S. is not Greece
I’m a fan of good information and reasonable discussion, so I’m thrilled that Mangee (whose office at Armstrong is not far from mine) will be a regular contributor to the Savannah Morning News. (Another economist who was formerly an Armstrong prof, Richard Cebula, wrote a Morning News column in 2009 and 20010.)
Today’s column obviously tries to put into a clearer perspective the hyperbolic statements like this one from Mitch Daniels in his response to the State of the Union: “In our economic stagnation and indebtedness, we are only a short distance behind Greece, Spain, and other European countries now facing economic catastrophe.”
Well that’s just not true, as Mangee explains today in his column. The United States is perfectly capable of getting its economic house in order and is still viewed as a safe haven by other countries and by investors worldwide.
From the column:
That many have, with a tone of grave urgency, contended that the U.S. debt has put us directly in the wake of countries like Greece, Portugal and Spain, has been overblown. Let me be clear. Are the current government deficits and increasing debt position of our country sustainable in the medium to long run? Emphatically, no. But, our country is not, in this regard, unlike our peers.
With a net debt to GDP ratio at 68 percent in 2010, we are, in fact, on comparable ground with other major advanced economies. For instance, this measure of debt position for similar G7 countries (a group of the most advanced economies of the world) such as Japan, Germany and the U.K., come in at 117 percent, 57 percent and 67 percent, respectively.
By flocking to U.S. debt and driving down borrowing costs, investors in financial markets have extolled the U.S. as still one of the safest havens in the world to which to lend money.