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To: Giordano Bruno who wrote (274746)	9/13/2010 9:29:12 AM
From: DebtBomb	Read Replies (1) \| Respond to of 306849

Europe's 'PIIGS' Get Battered and Fried ... Again: Is America Next? Posted Sep 13, 2010 07:30am EDT by Aaron Task in Banking, Politics Related: ^DJI, TBT, TLT, UUP, UDN, FXE, GLD Share retweet EmailPrint.The past week has served as a stark reminder that Europe's debt crisis is far from over, with Ireland and Greece at the center of the latest round of concern. As was the case last spring, many commentators are saying the debt problems in Europe's so-called PIIGS are a harbinger of what's coming to America. But "I would warn against overdrawing the analogies," says Greg Ip, U.S. economics editor at The Economist and author of The Little Book of Economics. First and foremost, countries in the Eurozone don't control their currency so can't devalue in an effort to boost imports. By the same token, they are unable to engage in quantitative easing, whereby a central bank effectively prints money in order to buy troubled assets and/or government debt. "We still have control of our currency," Ip tells Henry in the accompanying clip. "And it's not just any old currency. It's the U.S. dollar. The currency most other countries and central banks want to hold." The dollar's reserve status is an "exorbitant privilege" for the U.S. and should give us time to work out our debt woes, he says. "But we don't want to take that too far and keep fiddling while our fiscal accounting burns." The other big difference is that America's debt-to-GDP ratio is "nowhere in the ballpark" of levels seen in Europe's PIIGS, he says. "It's premature to think Greece and Ireland are big lessons" for America. Having said that, Ip is not looking at America through rose-colored glasses. "You want to be careful here about letting all the stimulus expire here in the U.S. and then pile on a big jump in tax rates, which is exactly what happens if Congress and Obama can't agree on some plan to let the Bush tax cuts continue next year," he says. "That is exactly the kind of shock that can push the U.S. back into a double-dip recession." Assuming it's not already there, of course. finance.yahoo.com