Is the World Broke? Entitlements, Spending May Spell Doom

Worldwide markets will soon close out a brutal month, thanks to a realization among traders and economists that spending by governments across the globe has threatened many economies with running out of cash.
 
What started as a cautious eye toward problems in a marginally important economy in Greece became a full-blown crisis, when ratings firms cut debt outlooks for fellow eurozone economies Spain and Portugal. There were concerns that the euro itself would collapse, or at least break into pieces, either because Greece was thrown out or more stable economies like Germany pulled out.
 
But it isn’t just a European problem. Spending in the U.S. threatens to leverage the domestic economy so much that it faces, within just a few years, a debt level that represents the country’s entire gross domestic product. And, since the U.S. is a relatively strong world economy, even with unemployment near 10% and uneven signs of recovery, American taxpayers have been forced to dig deep to help out the rest of the world.
 
Indeed, the bailout of Greece couldn’t happen without two American contributions: the U.S.’s funding of nearly 20% of the International Monetary Fund, which is helping to keep Greece afloat, and the move by the Federal Reserve to swap dollars for euros, thus helping prop up European banks.
 
So how did we get here? It is a combination of factors, but boils down to five main themes.