Summer's coming. An election campaign's pending. Obama's in favor of gay marriage. Mitt Romney's trying to figure out his vice presidential pick. The mainstream media is trying to second-guess his choices even before they're even made.
But, guys, there are some big issues out here. You know, real ones that affect real things in the real world. Issues that may shape the fate of the United States for a generation and more and that pose more peacetime danger to the national fabric than I have been aware of in my lifetime. Yet these things are barely being discussed: hardly spoken of, when we shouldn't responsibly be talking of much else.
There are a huge number of dangers to pick from, but here's my economic top 10:
1. The Eurozone crisis. The Eurozone is close to collapse. The euro, the world's second currency, will in my view not survive the coming years, certainly not in anything like its present form. Europe remains a vital American trading interest. Our banks and firms are tied up with its creditworthiness and prosperity. And right now, that's a little too much like being tied to an anvil. While swimming in the ocean.
2. Money-printing. The Federal Reserve remains committed to 'monetary loosening' at the slightest provocation. The list of disasters which that loosening has already, vastly, contributed to includes: the dotcom bubble, the housing bubble, the failure of the subprime mortgage market, the failure of Lehman, AIG, Bear Steans and their many crummy peers, a wildly out of control fiscal deficit, and much more. But Ben Bernanke would like to loosen whenever the opportunity presents. Financial firms are now QE addicted.
3. The fiscal situation "fiscal cliff." The United States deficit is out of control. Senior, sane, respected economists regard the U.S. as being effectively bankrupt. The Congressional Budget Office's own long-run forecasts of the national debt are hardly more encouraging. In the CBO's words, "By 2021, debt would exceed 100 percent of GDP. After that, the growing imbalance between revenues and noninterest spending, combined with the spiraling cost of interest payments, would swiftly push debt to unsustainable levels." [See page 13 of report]. They don't use the word "bankrupt," but it's what they mean.
4. The costs of healthcare. I want a country that guarantees acceptable healthcare for all its citizens. I also want a healthcare system which doesn't kill the federal government and threatens to suffocate private enterprise. Other countries manage this trick. Why can't the United States? (Clue: possibly because our politicians prefer partisan sniping to constructive thought.)
5. The pension time-bomb. And while we're on the subject of out-of-control public spending, why are our putative future presidents not discussing the fact that numerous state pension funds look to be heading for failure. Sure, that might feel like a state-level problem today, but when such problems become so widespread and so dangerous, they start to become federal ones.
6. Tax insanity. I like small government and the price mechanism. Like it, vote for it, believe in it. But that's quite a different thing from having a big government and paying for a small one. We're in a fiscal hole and we need to pay our debts. That means paying tax. And, hey, the billionaires don't even mind chipping in.
7. Wall Street. You thought that monster had been put back in its box? Come on, you didn't really. JP Morgan is a supposedly well-managed bank. It is a well-managed bank in comparison with its peers. But it still just lost $2 billion fooling around with financial derivatives that it, of all firms, should understand: because it invented them. But no. Give Wall Street funds, opportunity adding in moral hazard... and it'll always create a bomb. They get the bonus, you get the costs.
8. Lousy assets. And more broadly, there continues to be a frightening number of poor-quality financial assets floating around our economy and financial system. Mortgages that are underwater. What happened to Fannie, Freddie and the humongous guarantees? Toxic remains from the subprime collapse still sitting on corporate balance sheets -- and still so radioactive, they glow in the dark. The Federal Reserve probably now has the biggest stockpile of these assets, by the way, and it bought them with the money that they curate on your behalf. Bet you're pleased about that.
9. China. That the world economy hasn't completely collapsed before now has been thanks to the growth-miracle that has been China. But Goldman Sachs and others are now slashing forecasts to 13-year lows. My own view is that China is pretty much ex-growth. The figures may not say as much, but in China figures and facts are two different things. (China's financial and property markets have major problems of their own, but that's another story.)
10. Political failure, public protest, unstable regimes. And the evil fruit of all these things - few of which are purely American in occurrence -- are swelling into maturity across the globe. In Greece: riots. In Spain: mass protest. In Italy: disaffection. In France: a politics of non! In country after country, the old guard of politics are being swept aside by discontented -- rightly discontented -- electorates, but the new guard haven't yet figured out that they might want to try brand new political strategies for these altered times. Strategies like, you know, telling the truth...
Would it be too much asking that we all start focusing on real issues? I am not holding my breath.
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