Can US Learn from EU?

Could the European Union have something to teach America about fiscal responsibility? Dan Greenhaus, the chief economic strategist at Miller Tabak thinks it just may.

Sixteen finance ministers from the Euro zone met Monday to help Greece stave off default and prevent its crisis from spreading. Although members pledged support to help their southern neighbor, the specifics remain undisclosed. On Monday the finance ministers, lead by meeting chairman Jean-Claude Juncker showed they were not willing to settle for vague promises by the Greek government and gave it 30 days to show visible progress and concrete plan implementing immediate deficit-control measures.

When Greenhaus appeared Feb. 15 on the Fox Business Network’s “Bulls and Bears,” host David Asman asked, “So what lessons do we have to learn here aside from the obvious one of not spending beyond our means?”

“I think clearly the current situation of southern European countries are not entirely analogous to what’s going on here in the United States, but the broader theme here about spending and spending and spending is something to which we should heed here,” answered Greenhaus.

Stressing that his remarks are not simply an attempt to criticize the Obama administration, Greenhaus said the most pressing matter by far is government expenditure on defense and entitlement programs.

Co-host Elizabeth MacDonald touched upon what she viewed as the larger issue – Greece’s state controlled economy.

“Greece is running a Soviet Union style economy – where it owns casinos, oil refineries, hospitals, hotels … should it be doing more to privatize and is the U.S. running in the wrong direction here?” MacDonald asked.

“Certainly more privatization is better than less; I think that’s pretty clear here. At the same time there's a broad range of areas in which Greece has overspent and needs to consolidate,” Greenhaus replied. “With respect to Europe, they certainly have one of the largest entitlement programs. Government workers in some cases are entitled to something like 95 percent or so of their pre-retirement earnings in perpetuity upon retirement.”

Greenhaus did defend certain aspects of the U.S. stimulus program, but his defense was it was rooted in his belief that today’s elevated spending is “momentary and temporary.”

Greenhaus strongly agreed with Asman and MacDonald that the solution is always less government intrusion, not more.

Meanwhile, amidst the truly critical point and crisis in Greece, what some economists fear will cause a devastating domino effect throughout the global market, Greece’s public employee sector simply do not care. Greek workers shut down schools, grounded flights, walked out of hospitals, and cab drivers went on strike last week to protest potential cuts to entitlement. A much broader national strike [1] is planned for Feb. 24.

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