Friday, July 02, 2010
Financial Historian Niall Ferguson thinks the U.S. could be headed for a big fall- IF it stays on its current course of spending much more than it collects in revenue. Hear discussion from OnPointRadio. (A Must Listen). He points out what I have been saying here since I started... this business as usual nonsense is unsustainable. Business as usual meaning spending billions (now well over a Trillion) on wars that we don't need, being afraid to talk about a sensible tax policy...because Republicans have turned just the mention of taxes into a "taboo", not working fast enough to build and feed a Green industry- continuing to assume that it will magically blossom on its own, not working hard enough to build small/medium businesses and to create jobs, and not investing in educating future generations (why do I have to go $80,000.00 in debt before I even have a chance to live...just because I want an education? True story....my story). Other countries educate their people at very low cost or for free in some cases. They put a priority on people, rather than huge military industrial complex's or phony corrupt stock markets.
I am not as downbeat as some of the voices of gloom and doom. I don't think that the U.S. is headed for a quick collapse - at least not yet. In my mind, I am keeping my fingers crossed that it doesn't happen. The U.S. came close to this in the Fall of 2008. A collapse of the big banks was narrowly avoided. I am skeptical for the future though. The Obama administration can barely get a financial reform bill approved in the House & Senate - in fact, there are currently not enough votes to get the bill through the Senate. Republicans are blocking any efforts to make Progress on reforming an out of date system. With the prospect of clueless American voters returning these same Republicans to power in November of this year and again in 2012, there is no reason to be hopeful. Republicans are talking from both sides of their mouths. On one hand, Republicans say they are concerned about the debt, the deficit, and want to control spending, yet they blocked the Presidents Debt Commission - a commission tasked with steering the Country clear of complete economic collapse. I realize that this is part of the Republican Party's efforts to weaken Obama's ability to govern, so that he fails. But shouldn't they be more concerned about the Country???? Just a little concerned?
I believe the U.S. may be headed for several months, if not years, of stagnant growth and high unemployment which will only make the debt problems worse. With the lack of revenue from business growth and job creation, the U.S. will have to borrow more to maintain basic services. Cuts...and I mean massive cuts, will be necessary if the U.S. is to avoid a Greek-like crisis. But I just don't see that happening. Politicians from both parties are more concerned with their political careers. David Walker, former comptroller general of the United States, warns that by 2035, the U.S. will only be able to afford to pay the interest on the debt and nothing else. Unreal! Why isn't this issue on the front burner?
Why do I believe (am hopeful anyway....keeping fingers crossed) that the U.S. isn't in immediate danger of a complete meltdown?:
1. For now...the U.S. maintains the advantage of being the biggest economy in the World...and the biggest consumer. This means that other nations (who are now the producers) will be cooperative, for the most part, on trade, monetary policy, and will want to make sure that their chief consumer remains stable....so their economies can stay afloat.
2. The U.S. currency is still....for now... the main reserve currency for the globe..... for now.
3. The U.S. isn't as leveraged (debt as % of GDP) as many other nations in Europe.
So there is hope... but there has to be some action. Right now... no real action is on the horizon. That's what bothers me. The U.S. is stuck on stupid...stuck in some sort of perpetual malaise, thanks to the Republican Party and a stupid electorate that keeps supporting these jackasses.