Has the U.S. Become a Banana Republic?

The huge deficits and social security privatization promoted by the Bush Administration makes an economic crisis almost inevitable, Princeton economist warns.

1 minute read

November 26, 2004, 11:00 AM PST

By Michael Dudley


Paul Krugman, economist and New York Times columnist, warns that an economic crisis is only a matter of time. "The most immediate worry (says Krugman)is that Bush will simultaneously push through more tax cuts and try to privatize social security, ignoring a chorus of economic thinkers who caution against such measures. 'If you go back and you look at the sources of the blow-up of Argentine debt during the 1990s, one little-appreciated thing is that social security privatization was a important source of that expansion of debt,' (In 2001, Argentina finally defaulted on an estimated $100 billion in debt, the largest such event in modern economic history). 'So if you ask the question do we look like Argentina, the answer is a whole lot more than anyone is quite willing to admit at this point. We've become a banana republic."

Thanks to Michael Dudley

Wednesday, November 24, 2004 in Reuters

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