Niall Ferguson says the fiscal black hole that is Greece may not be merely a Eurozone problem. As goes Greece, so go we all. Excerpt:

For the world’s biggest economy, the US, the day of reckoning still seems reassuringly remote. The worse things get in the eurozone, the more the US dollar rallies as nervous investors park their cash in the “safe haven” of American government debt. This effect may persist for some months, just as the dollar and Treasuries rallied in the depths of the banking panic in late 2008.
Yet even a casual look at the fiscal position of the federal government (not to mention the states) makes a nonsense of the phrase “safe haven”. US government debt is a safe haven the way Pearl Harbor was a safe haven in 1941.
Even according to the White House’s new budget projections, the gross federal debt in public hands will exceed 100 per cent of GDP in just two years’ time. This year, like last year, the federal deficit will be around 10 per cent of GDP. The long-run projections of the Congressional Budget Office suggest that the US will never again run a balanced budget. That’s right, never.

Meanwhile, Greek crowds have taken to the streets to protest being asked to sacrifice anything significant to save their country from financial ruin. I found this remark to be really rich:

“We feel humiliated and we understand that things cannot remain the same as they were before,” said Vasiliki Revithi, 56, a biochemist at the National Organization for Medicines, noting that a monthly reduction of about $950 to her salary would mean no new car and cheaper makeup. “But we gave the world democracy, and we expect the European Union to support us.”

Reparations! Wow. Some economic watchers are worried that saving Greece, which has for years been a nightmare of fiscal indiscipline, would wreck the concept of moral hazard, which has been beaten to a pulp in the US, re: the rescue of our own banks. Here’s Iain Martin:

Might the Greeks, and other profligate nations in the EU, draw the following conclusion from the bailout? That in future there’s not much point in being good and trying to balance budgets because if it ever goes wrong there’s always a bailout at the end of the road?
The moral implications of all this are potentially significant for Western societies. When bad or reckless behavior is rewarded so blatantly, it is highly unlikely that it will lead to better behavior in the future. And if this is how countries, leaders and banks behave, why should the citizen bother to try and behave well? Hasn’t he or she just been shown on a grand scale in the last few years that being bad pays?

This all takes me back to the tiny seaside village of southern Portugal, in which I spent my honeymoon. We got used to taking coffee in the morning in a minuscule snack bar out by the waterfront. The proprietor was a native son named Julio, in his mid-30s at the time, who had returned to his hometown from London after a divorce. He spoke excellent English, and we enjoyed talking to him. I well remember him speaking with gentle cynicism about Portugal’s having joined the EU. You must be thrilled, I said to him, with all the development money coming to your country from its EU membership. He was, but he also said that it amounted to Portuguese politicians picking the pockets of northern Europeans. His view was that countries like Portugal, where corruption is more culturally accepted (and therefore present) than in northern European nations, were going to take as much money as they could get out of the northern nations, but carry on their corrupt ways. He was not optimistic that it was going to end well for the EU. Well, well, well.