We Americans have many reasons to be thankful this year, and one of the reasons is that we aren’t Italy — yet.
I’ve written before about the debt problems in Europe. Things keep getting worse there. The dominoes are slowly falling and threatening to knock over larger and larger economies.
The latest country to teeter on the brink is Italy. Today it offered six-month debt obligations, and had trouble selling them even at an unsustainable 6.5 percent interest rate. The financial markets obviously feel there is significant risk that Italy will default, and therefore they require an ever-higher interest rate to compensate for that risk.
Why should we care, here in the U.S. of A.? Because the same thing could happen to us. At some point, our debt load could pass an as-yet-unknown, magic threshold that makes investors feel insecure. Once the investors start to demand high interest rates as a result, our problems with balancing the budget get immeasurably worse.
It’s boring and depressing to think about such things. That’s why President Obama doesn’t focus on our debt problems, and Congress is happy to ignore them, too. We’re whistling past the graveyard, and in the meantime the spending and debt accumulation continues without any let-up — and the dominoes in Europe keep toppling.