How many times have we heard the warning that if the government in Washington doesn’t change its ways, the United States could become another Greece? Three years ago, when the crisis in Greece was just getting underway, I wrote a post making some comparisons between Greek and U.S. fiscal performance, along with a separate slideshow that presented a supporting set of charts.
One key chart showed the two countries’ fiscal balances moving in an ominously parallel pattern that suggested that the United States might be about to follow Greece down the fiscal drain. Here it is:
Last week, a reader who had run across the old slideshow scolded me for having been an alarmist. While the crisis in Greece has morphed from a crisis into a disaster, he pointed out, the U.S. economy has gradually recovered and its fiscal balance has improved markedly. Why? What were the key factors that made the difference?