The world is focused on the Greece debt crisis, but the recent collapse of the stock market in China is far more serious, Stephen Moore, distinguished visiting fellow at the Heritage Foundation, tells Newsmax TV.
"People have been focusing so much on Greece and Greece is a disaster area … This new bailout isn't going to help at all. It's actually just going to dust this under the carpet and it's going to reappear in six months or a year," Moore said Monday on "The Steve Malzberg Show."
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"But with China [was] the major, major player in the international markets and next to the United States, they were the second-most important country in the world.
"So the fact that they've inflated this huge bubble in the economy and that it's starting to deflate and burst, that is trouble for everyone involved in the world economy."
The Shanghai Stock Exchange Composite Index plunged 32 percent from June 12 to July 8. The index rebounded 11 percent last Thursday and Friday.
Moore explained that because China is a major trading partner and has such a huge impact on the overall level of world's gross domestic product, "it is something to be nervous about."
"China doesn't really fully get the free market model … and every time there's a problem, the central planners in Beijing think they can solve it by tweaking this, tweaking that.
"What China's looking at doing is spending more like our stimulus plan and printing more like our quantitative easing plans and as you know, we've talked about this many times, that hasn't worked in the United States, why would it work in China?"
On Greece, Moore called the southern European nation, "a giant welfare state with too many people sitting in a wagon and not enough people and workers available to pull the wagon.
"The wagon's come to a full stop and now they think they can get the Germans to pull the wagon or Americans to pull the wagon or the IMF to pull the wagon or the French and the Spaniards, and everybody's saying, no we're not going to pull the wagon for you.
"That means that this new loan, it's not going to change fundamentally the dysfunction of the Greek economy."
What Greece has to do to pull itself out of the financial hole is the opposite of what they need to do, according to Moore.
"They shouldn't be raising taxes, they should be lowering taxes. They should have a flat tax. They should be privatizing, they should be selling off assets," he said.
"Maybe one of the Greek islands should be sold. I mean they've got to come up with money because their economy isn't working."
On Monday, Greece Prime Minister Alexis Tsipras agreed to new austerity measures and economic reforms in exchange for a bailout and keeping the country in the Eurozone.
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