Even though the U.S. controls its own currency (see post of February 24) there is still much we can learn from the Greece situation. Note that Greece had a 2009 budget deficit equal to about 13% of its GDP while the U.S. had a fiscal 2009 budget deficit equal to about the same percentage of its GDP. Of course the U.S. GDP is about $14 trillion (largest in the world) while Greece GDP is about $360 billion (smaller than 12 of our states and about equal to Massachusetts).
What Greece did was to sweep its budget deficit problems under the rug with creative accounting and political dealmaking (sound familiar to what we see today in the U.S?). For years the Greece socialist government overspent on items such as their very generous public pension and high public sector (union) wages (again, sound familiar?).
So now Greece has to invoke a pretty severe austerity program to prove to Germany and others (who will bail them out) that they can get their deficits under control. Today Greece announced cuts of about 12% in civil service entitlements and about a 2% increase in their value-added tax (from 19% to 21%). Expect strikes and other protests from those affected, but Greece really has no choice.
The U.S. should learn that the longer a country waits to get its fiscal house in order, the more dramatic the eventual action will be.