But Greece needs a "much more dramatic fiscal program, which is going to be awfully painful and I doubt that will work politically, or debt restructuring. And no one wants to talk about debt structuring yet," says our guest Simon Johnson, an economics professor at MIT and former research director for the IMF.
Is America the next Greece?
With America's debt rising (as Aaron discussed earlier this week with budget hawk David Walker), it's only natural to wonder if America is headed down a similar Greek path. "Absolutely not," Johnson tells Aaron and Henry in the accompanying clip.
America's debt is denominated in dollars that we control, Simon notes, unlike Greece's fate that's tied to the European Union. With the right tax reform, the U.S. can steer clear of a debt crisis, adds Johnson, co-author of "13 Bankers: The Wall Street Takeover and the Next Financial Meltdown." The new book chronicles the rise of concentrated financial power and its threat to our economic well-being.
So what's the next shoe to drop?
Hint: Markets that are getting too hot now. "The next crisis, the next meltdown I think will be driven by some big collapses in emerging markets including China," Johnson says. "Everyone tells you that China can only go up. That's when you know it could get worse."