Crashing Down

I really do believe that we are dangerously close to seeing the world's fiscal house of cards come crashing down on all of our heads.

From George Will's column yesterday:

So the U.S. government, which would borrow 42 cents of every dollar it spends under the president's 2011 budget, is borrowing to rescue Greece and others from the consequences of their borrowing.

That nation, whose GDP is below that of the Dallas-Fort Worth metropolitan area, is "too big to fail," meaning too inconveniently connected to too many big banks. Bailing out Greece really rescues European banks that improvidently bought Greek bonds.

........America's projected $9.7 trillion in budget deficits in this decade will drive the nation's debt to 90% of GDP (Greece's is 124%).

So some people say that to avoid a Greek-style crisis, America should adopt a value-added tax.

But Europe's most troubled nations — the PIIGS: Portugal, Ireland, Italy, Greece and Spain — have VATs of 20%, 21%, 20%, 21% and 16%, respectively. As part of its austerity penance, the Greek government is going to give itself more money by raising its VAT to 23%.