The Greece Effect

The Greek debt crisis slammed our markets, but what does Greece's story have to do with our own? Robert Samuelson links debt crises with social insurance for the elderly:

Developed countries represent about half the world economy; most have overcommitted welfare states. They might defuse the dangers by gradually trimming future benefits in a way that reassures financial markets. In practice, they haven't done that; indeed, President Obama's health program expands benefits. What happens if all these countries are thrust into Greece's situation? One answer -- another worldwide economic collapse -- explains why dawdling is so risky.
It's true that if we canceled Medicare and Social Security today, we would have nothing resembling a deficit crisis. But it's not useful to knock President Obama's health program here. Our long-term entitlement crisis is a medical inflation crisis, and health care reform -- while far from a revolutionary and disruptive attempt to transform our delivery system -- put in place major efforts to target inflation, like the independent Medicare counsel and the innovation center, that didn't exist before.
Medicare Cost Growth - Age vs Inflation.png