Who's an economy for? Voters in France and Greece have made it clear it's not for the bond traders.
Referring to his own electoral woes, Prime Minister David Cameron wrote Monday in an article in the conservative Daily Telegraph: "When people think about the economy they don't see it through the dry numbers of the deficit figures, trade balances or inflation forecasts -- but instead the things that make the difference between a life that's worth living and a daily grind that drags them down."
Cameron, whose own economic policies have worsened the daily grind dragging down most Brits, may be sobered by what happened over the weekend in France and Greece -- as well as his own poll numbers. Britain's conservatives have been taking a beating.
In truth, the choice isn't simply between budget-cutting austerity, on the one hand, and growth and jobs on the other.
It's really a question of timing. And it's the same issue on this side of the pond. If government slices spending too early, when unemployment is high and growth is slowing, it makes the debt situation far worse.
That's because public spending is a critical component of total demand. If demand is already lagging, spending cuts further slow the economy -- and thereby increase the size of the public debt relative to the size of the overall economy.
You end up with the worst of both worlds -- a growing ratio of debt to the gross domestic product, coupled with high unemployment and a public that's furious about losing safety nets when they're most needed.
The proper sequence is for government to keep spending until jobs and growth are restored, and only then to take out the budget axe.
If Hollande's new government pushes Angela Merkel in this direction, he'll end up saving the euro and, ironically, the jobs of many conservative leaders throughout Europe -- including Merkel and Cameron.
But he also has an important audience in the United States, where Republicans are trying to sell a toxic blend of trickle-down supply-side economics (tax cuts on the rich and on corporations) and austerity for everyone else (government spending cuts). That's exactly the opposite of what's needed now.
Yes, America has a long-term budget deficit that's scary. So does Europe. But the first priority in America and in Europe must be growth and jobs. That means rejecting austerity economics for now, while at the same time demanding that corporations and the rich pay their fair share of the cost of keeping everyone else afloat.
President Obama and the Democrats should set a clear trigger -- say, 6 percent unemployment and two quarters of growth greater than 3 percent -- before whacking the budget deficit.
And they should set that trigger now, during the election, so the public can give them a mandate on Election Day to delay the "sequestration" cuts (now scheduled to begin next year) until that trigger is met.
ROBERT B. REICH, Chancellor's Professor of Public Policy at the University of California at Berkeley, was Secretary of Labor in the Clinton administration. Time Magazine named him one of the ten most effective cabinet secretaries of the last century. He has written thirteen books, including the best sellers "Aftershock" and "The Work of Nations." His latest is an e-book, "Beyond Outrage." He is also a founding editor of the American Prospect magazine and chairman of Common Cause.
Follow Robert Reich on Twitter: www.twitter.com/RBReich
Sourav Roy: Tell Us the Truth Behind British Arms in Asia, Mr. Hague?
Re-industrialization would create new NATIONAL WEALTH (and new JOBS) that will be available for a portion to be CONFISCATED in the form of TAXATION by various levels of government in order to create funds to pay for taking care of those that cannot take care of themselves, building and operating schools, streets, water and sewer systems, repay sovereign national debts, pork barrel projects, green projects, wars, streets, bridges, highways, welfare, unemployment, police, courts, prisons, fire fighters, social security and other WEALTH CONSUMING government provided bureaucratic activities for that family, tribe, city, state, or nation, without borrowing money and obligating future tax collections from future generations to repay those loans (Treasury Bonds).
This GDP has very little to do with the ability of a nation to repay their national debt especially if the majority of the GDP activity was US government borrowing money from wealth producing entities in the industrial nations and using that borrowed money to pay tax funded government employee payrolls, unemployment benefits, welfare, retirement pensions, infrastructure projects, providing free medical, housing, wars, social services, pork barrel projects, military contracts, and other tax funded activities that do not produce any new taxable NATIONAL WEALTH that the nation could confiscate and use to spend on government activities and repay the national debt?
CONFISCATING some of the NATIONAL WEALTH from the businesses that create that wealth and then spending that wealth for tax funded government activities does not produce any new taxable NATIONAL WEALTH that the nation could then confiscate and use to spend on government activities and/or to REPAY THE NATIONAL DEBT?
What if a lot of the GDP is spending funds for flipping hamburgers, cleaning houses, selling insurance, selling stocks and other newly printed financial products, selling investments, suing each other, and other activities that do not generate any additional NATIONAL WEALTH?
Austerity?
Hardly. Stop the lies and propaganda.
And these numbers use current dollars, so everything is adjusted for inflation. Right from the OECD.
Have fun in reality land!
1. What is an acceptable ratio of debt to GDP?
2. What is our current ratio of debt to GDP?
3. How much money are you talking as a stimulus?
4. How long do you think it will take to work?
5. What is your estimate of our debt to GDP ratio after your ideal stimulus?
6. What is your plan for lowering our debt after the stimulus works?
and last but far from least---
7. What is your realistic plan for getting such a stimulus enacted?
1. plant, grow and/or harvest something of commercial value from the earth;
2. extract something of commercial value from the earth;
3. manufacture something of commercial value that is consumable
4. construct a building that is permanently useful for rental income;
5. provide professional services (medical, legal, dental, engineering, architecture, land surveying, technology, accounting, etc.);
6. collect payment for patent and copyright uses;
and if they then trade, sell, lease or rent these items and/or services to parties outside of their family, in return for a net transfer of gold, currency or commodities from other parties outside of their family into their own family, then that family is enriched.
International Trade Balances indicates that Brazil, Russia, India, China, (BRIC) nations, plus Pakistan, South Korea, and the other industrialized countries of the world with positive net foreign trade balances are NET CREATORS of NATIONAL WEALTH for their nations, and the de-industrialized USA and most of the European nations with negative net trade balances are NET CONSUMERS (DESTROYERS) of the existing NATIONAL WEALTH in their nations, whose citizens live “high on the hog” by continuously borrowing wealth from the industrialized countries to pay for government activities and also for imported consumer products.
It would be like China telling us that they will not buy any more treasury bonds unless we cut our government spending. So when those countries elect socialists, its not going to help them, because the only people that can help, are not in those countries needing help. They have already run out of their own money.
If our treasury yields started to climb, we would be in the same boat. It would be a disaster. Our yields are unbelievably low. That's the only reason we can continue with our massive debt as % of GDP.
"Who's an economy for? Voters in France and Greece have made it clear it's not for the bond traders."
What that says to me is that you think it is ok for people to refuse their promises. The government and citizens promised to repay that money and adhere to the covenants of the bond. Where does it say they can reneg and screw the bondholders (other citizens) because it would cause their lifestyle to suffer?
1. The interest on US bonds is one of the largest budget components.(See Ellen Brown, Warren Mosler)
2. Tax wall street.
3. A Value Added Tax designed to function as a tariff.
4. Increase the Social Security Cap to 500k.
Basically, we need to re-jigger the tax code starting with a Wall Street Sales Tax.
So - bave, why shouldn't we expect the rich to pay their fair share and contribute like we all do to bettering this country? Is it too much to ask those who have profited the most from this country to give back?
PS: Why do you turn a deliberate blind eye to the extreme wealth inequality we have in this country? How is the top 1% now controlling more wealth than 90% of all other Americans economically just??
I think most would buy into more spending in a downturn if the US had a surplus, wasn't run by special interests and the US was financially well managed and living within its means.
However, the current problems are in part caused by huge deficit spending (stimulus), on wars, entitlements, corruption, special interests and so on.
Previous deficit spending stimulus didn't drive huge growth that paid for the deficit. This is a global economy where non government organizations must compete globally for wages, products and price. Current policy only created bubbles of corruption like housing market. So why is more deficit spending and dropping the bill on future generations going to help?
The most interesting comments were lets have 2 solid quarters of growth before we attack the deficit and tax rich more. Nobody is going to let up on the accelerator to cut the deficit if things get better, there is no evidence that every happened. The math of taxing the rich doest close the deficit either.
So many people and companies are living off deficit spending there is no growth path to cut that off when normal commerce takes over. The only conclusion is to reset and live within means of new global realities.
see http;//www.henrymakow..com/revelations http;//www.infowars.com
Maybe those nations are paying for everything by borrowing money from individuals in the industrialized nations instead of re-industrializing to create new NATIONAL WEALTH so that they can stop borrowing money to live.
(The pillory was a device made of a wooden or metal framework erected on a post, with holes for securing the head and hands, formerly used for punishment by public humiliation and often further physical abuse, sometimes lethal.[1] The pillory is related to the stocks)