Was it C-SPAN, or PBS, or ..... Well what does it matter? Their "expert" economist was explaining why, when you have a large public debt, the best course of action may not be austerity. To make his case he compared Iceland with Greece. Both had large public debts. Iceland chose not to follow the path of austerity. It has been doing quite well in terms of the employment for its citizens. Greece was put on austerity and has bee suffering grievously with unemployment unimaginably high.
Hmmm. Maybe there is something to spending your way out of your debt. Perhaps, the medicine of austerity is not all that it's cracked up to be. It then occurred to me that Iceland and Greece may not be quite as alike as the "expert" had implied. I did a bit of research and this is what I found:
The Ratio of Public Debt to GDP
2008 2012 20013
Iceland 28.5 % 96.2 %
Greece 105.4 % 170.3 % 156.9 %
USA 64.8 % 101.6 %
Well, isn't that interesting. We see that in 2008 Iceland had a relatively modest ratio of debt to GDP.
Their debt ballooned due to the collapse of American real estate -- the one that resulted from its securitized mortgage debacle.
Greece on the other with its early retirement for workers and other entitlements was clearly on a collision course with the debt collector. Its debt-to-GDP ratio went up to 170.3 % in 2012. When the Germans forced it to undergo austerity, the ratio began to fall to 156.9 %. But that's still incredibly high.
At 101.6 %, America's debt is really too high. But, it's not simply that we're high, it's that we've been on an upward path due mainly to growing entitlements.
The lauded Icelanders apparently believe that their debt to GDP at 96.2 % is too high. We're at 101.6 % and still climbing. But, who's worried? Not economists on the left.
Bottom line: When experts quote statistics, beware.
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