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Economist warns: Europe, then America

May 25, 2010 at 11:20 AM   |   Comments

COLLEGE PARK, Md., May 25 (UPI) -- U.S. economist Peter Morici warned Tuesday the debt crisis undermining the euro will likely cross the Atlantic Ocean and hit the United States.

"The next financial tsunami is emerging and will ripple to America," Morici, an economics professor at the University of Maryland, wrote in an op-ed piece.

Morici pronounced Greece "insolvent."

"No austerity or new taxes will pay its debts," he wrote.

The next weak link is Spain and "Germany and European banks can't take that hit," Morici wrote.

He said Europe was suffering from "the weight of its own financial self-abuse," and warned the healthcare reform bill would be the straw that breaks the camel's back in the United States.

After Europe overspent, the United States now "has a social safety net that rivals Europe -- and is more expensive," he wrote.

The difference between Europe and the United States: If taxes in the United States were brought up to par with taxes in Europe, U.S. citizens would still have to shell out for private health insurance and college tuition. In Europe, governments "pick up the tab" for these items, Morici wrote.

In time, "excessive borrowing will cause the bond market to render the same judgment on Washington as it will for Athens and Madrid," Morici wrote.

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