Till debt do us part
Last week Paul Krugman, who won the Nobel Memorial Prize in Economics in 2008, was in Belgium and was interviewed in De Tijd. Asked about a very Belgian thing - public debt - he wasn't too worried, he said. Krugman called it an 'issue', but not a killing 'issue'.
In fact, the Belgian case seemed a source of some mild optimism. Belgium has showed, Krugman argued, that an advanced country can have a public debt of 120 percent of GDP without provoking a financial crisis. The only major problem a country can suffer is that financial markets no longer believe it will pay back its government bonds. Throughout the years, Belgium has showed that it takes a very high level of debt in order to provoke such a fundamental distrust.
That same week, Krugman used the debt track record of Belgium in his blog to show that public debt and deficits are not the main problems for the US, it is the faltering economy. If Belgium can do it, the US certainly can, seems the idea. An unexpected variation on 'Yes, we can'.
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