Join Date: 08.03.2005
Budget Disarray: US Set to Restage Greek Tragedy
The US has more in common with heavily indebted southern European countries than it might like to admit. And if the country doesn't reach agreement on deficit reduction measures soon, the similarities could become impossible to ignore. The fiscal cliff looms in the near future, and its not just the US that is under threat.
Join Date: 06.11.2012
The US is not Greece or Germany
Germany is in no position to be offering financial advice to the US. After exploiting southern Europe for its own benefit, Germany is now forcing a totally wrong-headed austerity on the losers instead of helping. Greece's biggest problem is the Euro. With its own currency, it would not have been such an easy mark for exploitation by the banksters and would have been able to devalue to solve its problem with much less disruption and misery than the Germans are forcing on it. The US has its own currency; a major difference. And we actually make the rich pay taxes , not nearly enough to be sure, but something that Greece is still not doing. The US economy, if necessary, could stand pretty much alone, something that Germany cannot say. Germany's wrong headed forced austerity will eventually take Germany down with it if it is not corrected.
Join Date: 01.11.2012
Greece is different than the US......
The joke in Greece is that avoiding taxes is a national sport, and that is but one of the many reasons why they have such a serious budget issue. They need to get their "tax collection house" back working in order to begin to get back on a sound fiscal track. In America, the talk of letting the Bush Tax Cuts that were reinstated by President Obama in 2010 to negotiate and accomplish other policy issues with the Republicans are set to expire automatically at the end of the year. I believe that there will be a tax base increase as the President understands that the mandate of his election and public opinion of a fair tax plan is out there and will act accordingly so as to avoid such a fiscal alternative as what we see happening in Greece, and in other countries prior to the "Greek Tragedy". Fiscal austerity has been proven not to work as demonstrated by other instances of it's application with other countries in the past. America will not go down that path as our elected officials (many of whom still have some sanity left) understand, and have seen the results of such draconian economic actions, and are afraid of their political careers when they come up for re-election.
We shall see, and hope we here in the U.S. do not fall for the same proven failures of prior austerity actions and unfair taxation policies that have the potential of such an outcome. We need to raise the taxes on those that can afford it, and have a fair and balanced tax code for all.
Join Date: 11.01.2006
From reading your article one would neve guess that the latest figures show that the USA has overtaken Germany as the second largest exporter in the world.
American manufacturing is now number one again, surpassing China which overtook the USA a couple of years ago.
"According to United Nations data, the U.S. is still the largest manufacturing country in the world."
US MANUFACTURING ON THE RISE
The USA is experiencing an oil and shale gas boom that is going to make the America more wealthier than ever as it become the largest energy producer in the world by 2020.
“ Domestic oil output is the highest in eight years. The U.S. is producing so much natural gas that....This transformation could make the U.S. the world’s top energy producer by 2020."
The world's largest manufacturing country, 2nd largest exporter in the world. Oil and Shale gas boom. Not exactly Greece is it?
Join Date: 31.12.2011
I am always puzzled by many of the commentaries on the debt crisis and the so-called "austerity" responses that are being pursued as if these responses were a needless exercise in economic masochism.
Simple back-of-the-envelope calculations will demonstrate the profound nature of the problem. Take America.
The next four years of Obama will be bad. There is no question that this will be so. The figures are these. America's outstanding national debt is now in excess of the value of its economy's annual output of $16 trillion.
It has risen 30% over the last five years. This means that some $4 trillion of the rise in US GDP - or annual income - over the last five years has been on credit, not from the basic earning power of the economy. It has been borrowing from the future to maintain current living standards.
What does this imply. Well, it means that if America stops the nation's debt from rising so will living standards of the citizens cease to rise.
To stop debt rising it has to eliminate the annual deficit of $1 trillion which is equal to 6% of the $16 trillion a year output of the economy. But if it eliminates the $1 trillion by cuts in public spending and higher taxes American living standards immediately fall by 6%.
If it does not eliminate it the debt goes on rising and America is now into the end game where it starts issuing new debt to meet interest payments on outstanding debt. How long, pray, can this go on? The country is on a treadmill which it cannot get off. All it can do is pray for growth which isn't going to occur because those who are most instrumental in achieving growth - that is the private sector - are perfectly well aware of the sword of damocles hanging over their heads.
Such is the cancer of national debt when it exceeds the capacity of an economy to either repay or service its debt.
Join Date: 14.08.2012
The Greeks cannot print money as USA does…
The Greeks cannot print money as USA does…
The fact that USA can print money is a benediction, or perhaps a course.
We are all thanking God that the Drachma is not an international currency as it was at the time of the Pericles in Athens, the problem is that since the American default of 1971 perpetrated by the dynamic duo Kissinger-Nixon (in this order) when they nearly killed De Gaulle from a heart attack (see The Western Monetary Sin, by Jaques Rueff) when they UNILATERALLY decided to dishonour the US dollar convertibility into GOLD as established in the Breton Woods agreement at the end of WW II.
The fact that the Athenian owls are not staring at US these days, that does not mean that we are out of trouble.
In fact II do believe that the current financial collapse is due to the fact that there is NO CURRENCY.
US dollar is FIAT (not a car) MONEY !
It worth what the government printing it SAYS it worth…
If there is something so close to a worldwide government this is it, we have international contracts denominated in US dollars, we have debt denominated in US dollars, BUT we cannot print US dollars, not even (in theory) US government can… but only Benjamin Bernanke at the FED…
Let US imagine if there is INFLATION in US dollars, what will happen ?
First of all, US debt will diminish in the same proportion !
What will happen with the market value of assets ?
It would be real chaos, nations will return to bartering.
Now, what stops USA to depreciate the currency ?
Nothing, in fact are printing at full speed, the only counter to inflation is to artificially stimulate the demand for US dollars.
Printing money is magic, it fixes the Twin Deficit dilemma (helps paying the budget deficit making US products cheaper at the same time, is like making gold from lead…).
Well, in my view is like the person falling from a 20th floor when he is about the 3rd he says: “up til now I am OK !”.
Another advantage for the USA in debasing the currency is to become more competitive…
Thus, I do not see any reason why USA will not follow that path.
The problem is that we have no other currency to use as a comparison.
There are none !
The Australian dollar increases its value but there are no enough dollars for the whole planet, the Euro is in tatters, the renmimbi is pegged to the US dollar (reducing the size of the debt is not a good incentive for China…), there is nothing left, thus we have the IMPRESSION that THERE IS NO INFLATION, but that is as deceiving as someone sitting in a stationary train seen another in movement thinking that he is moving as well…
Yes, there is INVISIBLE inflation accumulating fueled by: 1- FED’s printing without restraint and backing in real assets, only DEBT; and 2-artificially LOW INTEREST RATES.
If there is no credit (apart for credit offered to rich financially troubled nations such as Spain) the interest rate should be reflecting this fact, but it does not.
Thus, we have no credit, low interest rates, uncontrolled emission, hidden inflation, recession, so lest US call a spade a spade, we are at the verge of STAGFLATION.
To be honest, I really miss the ancient silver Drachmas sporting the clever owl…
Reality, as usual, is far more fantastic than fiction.
Join Date: 14.08.2011
What a stupid companrison
How can anyone in their right senses compare the US to Greece. The US can borrow 30 year money at leas than 3% Greece cannot borrow at any price. The US is the owner of the world's primary reserve currency that all countries want and trust for international trade. Greece does not even has its own currency. The US has no limits on the amount of money it can create. Greece cannot create any money becasue it is not in control of its currency.
To get out of the recession the US needs to heed Krugman's advice. Borrow as much as you can at current cheap rates for long term money and use it to refresh its infrastructure, its airports , its bridges, its rail network.
It is not how much you borrow, It is the price and the term you borrow at and what you do with the money borrowed. If you borrow money to finance a bloated public service it is a waste. If you borrow to upgrade unfrastructure it is good investment.
Capitalist for wealth creation. Socialist for Distributing it.
Join Date: 22.09.2012
This so called "cliff" is not a doomsday or anything like it.
First it should be noticed that it is not imposed by an outside power or agency but self imposed unlike demands made by the EU. It was imposed by the US congress who were kicking the can further down the road who said they will kick it no further beyond that date. At worse they can agree to rescind that date and kick the can farther.
Their reasoning for such action could be "The economy has turned the corner and on the rebound. We don't want to hinder this growth and it is better to deal with these issues when the economy is stronger." I am not sure I can find fault with this reasoning to kick the can farther down the road.
For those who wish harm to the US and our economy I would not suggest they hold their breath.
Join Date: 11.11.2012