Greek News

The New York Times reports:

Greek voters narrowly favored a pro-bailout party in parliamentary elections on Sunday, a result that is likely to calm world markets and ease fears that the country will leave the euro zone.

The Future of the EU and Greece

Jean Pisani-Ferry concludes:

A lesson from the Cold War is that ultimately, rational behaviour proved to be the best insurance against disaster. Today also, both partners have a common interest in behaving in cool blood. They have to set red lines credibly and unambiguously, as well as to indicate where there is room for discussion. This can only happen after June 17, when a new coalition emerges from the election and forms a government in Athens. In the meantime, we are bound to live dangerously.

This is of course assuming that (1) only rational decisions were made during the Cold War – rational decisions after an irrational decision are different than successive rational decisions – and (2) there is only one rational choice given that can be deduced given the information available.

The OECD’s Opinion on Europe

From the OECD:

The global economy is gradually gaining momentum, but the recovery is fragile, extremely uneven across different regions and could be derailed by the crisis in the euro area, according to the OECD’s latest Economic Outlook.

A Message for Paul Ryan

From the Democracy in America blog at The Economist, responding to Paul Ryan claiming America’s debt trajectory is European-like:

The European Union has lower government debt levels than America. Gross government debt in the 27 nations of the EU was 80% of the region’s GDP at the end of 2010; in America gross federal debt at the end of 2010 was 94% of GDP. Furthermore, government debt is growing more slowly as a percentage of GDP in the EU than in America, because pretty much every nation in the EU is implementing austerity measures. The general government deficit in the EU-27 in 2010 was 6.6% of GDP. In America the federal deficit in 2010 was 9% of GDP.

To really illustrate how the U.S. compares to Europe I pulled together some data from the OECD comparing America to European OECD countries, the only ones projected to have higher debt as a percentage of GDP than the U.S. in 2012 are Ireland, Portugal, Iceland (which is arguably not European), Italy, and Greece. Note that while the U.S. is just below the OECD average this is only because of the outlier Japan which has a projected debt/GDP ratio of 219.1 for 2012.

As the post above pointed out, this doesn’t necessarily mean Europe’s economy is doing better from a growth standpoint, it isn’t. But America’s debt is not European-like, it is American.