There is a sense of relief that Thursday's market roller coaster was a computer glitch and not the opening day of another season of panic.
That is a false security because the Greek drama is just the first act in a show that is expected to open soon in Portugal, Ireland, Italy and Spain. A hung Parliament in the United Kingdom increases the likelihood that Great Britain will join the conga line of countries heaving under the burden of more than a decade of profligacy.
The United States is on the same course, with an annual deficit that has exploded from $160 billion in 2007 to at least $1.4 trillion this year.
This year's red ink doesn't include a "stimulus" or a TARP. It is just pure profligacy, the consequences of putting Nancy Pelosi in charge of the House and David Obey in charge of the Appropriations Committee. The latter has announced he's "bone tired" and thus is retiring, which must strike people who work for a living as risible. Obey's off to a sinecure as a lobbyist backed up by a lifetime pension with great health benefits, and he is "tired?" That is Beltway arrogance for you.
A greater arrogance – a disconnectedness from reality actually – pervades the public sector. Its Democratic office holders and their public employee union clientele think that Greece doesn't have anything to do with them. They have concluded that it is possible to screw the debt holders of GM and not have that massive breach of contract come back to haunt them.
But they are wrong. The November elections will be fought on one huge issue and one issue only unless Iran and Israel refuse to postpone their confrontation any longer.
The only domestic issue of consequence will be how the U.S. will seek to avoid the Ghost of Christmas Future that is Greece. Will it be by a painful restructuring of all public contracts, beginning with Obamacare and including changes to the retirement age of Social Security and a redo of most of the retirement deals with the public employee unions that are crippling the states and their local economies?
Or will it be by massive tax hikes that suffocate economic growth for a generation?