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Is the U.S. doomed to a Greek-style meltdown?

It seems like just yesterday that we were asking ourselves if the United States was Rome. In light of the financial collapse in the other great cradle of Mediterranean civilization, the New York Times' David Leonhardt poses the inevitable follow-up question:

It’s easy to look at the protesters and the politicians in Greece -- and at the other European countries with huge debts -- and wonder why they don’t get it. They have been enjoying more generous government benefits than they can afford. No mass rally and no bailout fund will change that. Only benefit cuts or tax increases can.

Yet in the back of your mind comes a nagging question: how different, really, is the United States?

The U.S.'s national debt, Leonhardt notes, is projected to rise to 140 percent of GDP within the next twenty years -- Greece's is 115 percent today.

Elsewhere at the Times, Paul Krugman questions the credibility of that long-range projection and argues that the U.S. shouldn't worry:

 

 

Basically, the United States can expect economic recovery to bring the deficit down substantially; Greece, which has a larger structural deficit and also faces a grinding adjustment to overvaluation with the eurozone, can’t.

About that eurozone: in a phenomenally awkward bit of timing, Estonia happened to be trying to join it today, and succeeded. Other countries like Poland and Bulgaria, however, are having second thoughts. Greece's current predicament, and the looming crises in Spain, Portugal, and elsewhere, have offered a cautionary tale. The Associated Press looks at the divergent experiences of Hungary and Romania, which are members of the European Union but not the eurozone, and Greece, which is in both: When the IMF bailed out Hungary and Romania in 2009, the countries were able to make the necessary adjustments quickly, if painfully, by letting their currencies fall. Greece, however, can't, and is now looking at far harsher, more drawn-out austerity measures attached to its 110 billion euro bailout.

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China's earthquake watcher

Independent analysis of government policy is rare and generally unwelcome in China; it's even rarer for such advice to be followed. But an exception that proves the rule is when the advice-giver has a direct line to decision-makers, and when there's serious state money to be saved. 

While in southwest China recently, I caught up with Yong Yang, a rabble-rousing independent geologist who has previously faced death threats from businessmen and local officials for raising concerns about the feasibility of lucrative proposed projects. 

One story he shared seems particularly poignant now, on the second anniversary of the May 12 Wenchuan earthquake.  

At the time the earthquake struck on May 12, 2008, Yong was in the field conducting research when he received a mobile text message (voice-networks were down) from his son, a college student in the provincial capital of Chengdu: a big earthquake has struck Sichuan province -- go find a TV.  

Yong hunkered down at a local restaurant to watch broadcast of the devastation. He had previously warned government officials about the vulnerability of certain buildings in the quake-vulnerable zone, but to no avail. 

Now he knew that dams along the region's Minjiang River were in danger of collapsing, and if they did, several large hydropower stations along the river could be flooded and destroyed. He was already making arrangements to leave the next morning to conduct an investigation of the damage, but before he did he sent a text message to an influential friend who happens to be a former Vice General Secretary of the National People's Congress: turn off the hydro-power stations; watch for damage. 

Usually following the advice of environmental watchdogs would cost the government money, putting the kabosh on various money-making projects. But in this case, Yong's advice concerned how to save 30 billion RMB in state investments. 

And this time, his advice was followed. The next day, the government gave orders to release water from dams along the Minjiang River.  

Yong meanwhile continued on to the quake-stricken region, where he and a small band of fellow scientists tried to make sense of what to do next. Predictably, not all of their subsequent suggestions about rebuilding and conservation have been followed. But when Yong has information useful to the government that Beijing doesn’t have, at least he has an in. His next project is a study of glacier melt on the Tibetan-Qinghai plateau.

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