The domino theory used to justify billions of dollars in government defense spending. Missile bases, clandestine operations and even war were needed to stop communism from toppling one government after the next. American troops and dollars found their way to Vietnam, Korea and Central America all in the effort to stand in the way of political dominos.
Now it is financial dominos that has the world worried. And with good reason. The global economy is interconnected in ways its politics a generation ago never were. Yet, the strategy that leaders are relying on today to stop more financial dominos from falling is the same as it was when communism was the threat.
Back then, political leaders used containment to isolate countries slipping into a disagreeable economic system. Why do you think Cubans still drive Plymouths and Buicks from the Eisenhower era?
Today’s leaders are using the same playbook with the European debt crisis, but with modern financial tools. Separate the faltering market, prop up its neighbors and promise to pay until the threat subsides.
The financial trouble that began in Greece and Portugal has spread to Italy. Could Spain be this week? Is France vulnerable?
How long can the Eurozone’s strongest country, Germany, stay standing if others around it are falling? Global markets have a way of imposing fiscal discipline when political leaders don’t have the courage themselves.
Time is ticking away for the “super committee” in Congress to agree on ways to right-size the federal government’s budget. America’s political leaders would do well to stay out of this domino game.
Tom Hudson, anchor and managing editor of “Nightly Business Report” produced by NBR Worldwide and distributed nationally by PBS, can be followed on Twitter HudsonNBR.