Why the Global Economy Is Tanking

The New Republic ^ | August 5, 2011 | Petr Boone Simon Johnson

[lbryce]

Last Sunday, legislators and the president, convinced that the United States was facing an imminent risk of default and their sound decisions were needed to wrest global well-being from the jaws of collapse, purportedly scrambled to announce a deal on the debt ceiling hours before the Asian markets opened. Instead of cheering the deal, however, global markets thumbed their nose and turned down within hours of the announcement. Indeed, the most striking response to the “successful” conclusion of the United States debt ceiling cacophony on Sunday was the sharp fall in global stock markets the next day. Then, on Thursday, the Dow plunged over 500 points, the biggest single-day loss since December 1, 2008, at the height of the financial crisis. Why the painful downturn?

The failure of markets to rally around the purported good news reflects the far deeper troubles our global economy faces. The chaotic conclusion to the U.S. debt ceiling debate, meanwhile, only makes the future look bleaker, because it signals that U.S. politicians, like their European and Japanese counterparts, may be incapable of responding in a timely fashion to these momentous issues.

The overriding problem that most wealthy nations face is they have promised far more in public sector spending than they are currently willing to pay for in taxes. In the United States, the federal government spends 1.7 times its total revenues, leaving the country with a 9-10 percent 2011 GDP budget deficit, and little route to a solution if, as the Republicans demand, no further revenues are raised. It remains unclear how anyone decided that the federal government must not collect revenues exceeding 18 percent of GDP, irrespective of what happens as the society ages, but influential Republicans are pushing for a constitutional amendment that would set this limit in stone.

[lbryce]

Steel yourselves for the economic armageddon just about ready to implode.

[GeronL]

Let me guess, the NR thinks we need more debt spending?

[dajeeps]

“U.S. politicians, like their European and Japanese counterparts, may be incapable of responding in a timely fashion to these momentous issues.”

This is exactly why central planning doesn’t work after it hasn’t worked. And in case those statists didn’t know it, they lost willing partners in socialism and monetary manipulation in order to fleece all Americans, including posterity, out of their dreams. We aren’t going to follow the definition of insanity and keep trying the same old things again and again expecting a different result. We know freedom works and that is the only thing that does.

[Opinionated Blowhard]

Its dawning on everyone that, after 70 years, the Welfare State Ponzi Scheme is finally out of other people’s money to pass out to freeloaders.

[mlocher]

It remains unclear how anyone decided that the federal government must not collect revenues exceeding 18 percent of GDP

So raise it to 20%. Wait, that isn't enough, so raise it to 25%, Oops, the gov't needs 30%. Where does it end?

[RowdyFFC]

Yep, how much exactly to these communists think they can get of the producing American’s back.

Not only do we have people refusing to raise themselves out of poverty but demanding their right to what everyone else has, we have created a population of millions of government employees that are worse than leeches. That produce nothing in real cash dollar wealth, yet demand MORE of everybody elses wealth. And I’m not talking about policemen and firemen...I am talking about 2 MILLLION federal government employees (excluding the post office and military) leeching off the backs of taxpayers all over this country. USELESS PEOPLE! Even their taxes are paid by other taxpayers, their homes, their cars, even the deodorant that keeps them from stinking. THIS is more threatening to our country as the government expands itself.

[Roninf5-1]

Why the Global Economy Is Tanking

The American Middle-class was the pillar that supported the entire world economy. It has been undermined mainly in two ways.

1. For the past thirty years the Republicrat/Dumbocan Party had deliberately shipped out our manufacturing and industrial base and shipped in ten of millions of Third-worlders to displace American workers from jobs that couldn't be outsourced.

2. The Republicrat/Dumbocan Party had undermined the value of the dollar with decades of unsustainable deficit spending on worldwide military operations overseas and society destroying social programs at home.

The goal of all of this is to sweep away the American Middle-class and its notions of God given rights, private property, and Constitutional law. The American Middle-class and their firearms are the only thing standing in the way of the Globalist Bankster's One World Government.

[Steamburg]

More Clearly: SOCIALISM IS A FAILURE!

[Buckeye McFrog]

The overriding problem that most wealthy nations face is they have promised far more in public sector spending than they are currently willing to pay for in taxes.

just another commercial for hiking taxes

[InterceptPoint]

The overriding problem that most wealthy nations face is they have promised far more in public sector spending than they are currently willing to pay for in taxes.
+++++++++++++++++
While the above statement is certainly true, we should not be overlooking the fact that the central banks have been willing participants in this Ponzi scheme - always ready as the lenders of last resort to the money hungry politicians.

What is surprising, however, is that these supposedly brilliant bankers didn’t realize that in continuing to feed those made up dollars and euros to to nearly bankrupt governments the are risking that very same Ponzi scheme which has been their golden goose. After all, a total collapse of financial system in Europe or the U.S. could not be good for central bankers. They could have and should have put the brakes on a long time ago. Right now it is not clear to me that they have the necessary braking power to prevent the train wreak headed our way.

[flowerplough]

Onliest reason to let a borrower set his own debt limit is so you can string him along until you hang him.

[mountn man]

The American Middle-class was the pillar that supported the entire world economy. It has been undermined mainly in two ways.

By middle class, you must mean anybody making over $100k

[MNJohnnie]

I always have to laugh when I watch the same Leftist Political class that tells us they can reduce smoking by raising taxes on tobacco turn around and tell us that raising taxes on income will have no impact on economic growth.

We don't have a revenue problem, we have a spending problem.

NO amount of tax hikes will ever pay for the Progressive Fascist insatiable appetite for spending.

In 1986, 1991 and 1993 people like this author told us "give us more taxes and that will fix the debt problem". Far from "fixing" the Debt problem the political class simply took the new revenue and exponentially increased spending.

So instead of singing the same old Progressive siren song Petr Boone Simon Johnson, why don't you on the left FINALLY discover the intellectual honesty to admit your political theories are epic failures.

[vpintheak]

SOCIALISM.

[rbg81]

The reason I oppose a “mix” of tax increases and spending cuts is because Congress will immediately spend the tax increases—and then ask for more.

I think the only way to get spending cut is if EVERYONE pays taxes—not just the upper Middle Class and Rich. And no more “Earned Income” rebates.

[FlyVet]

Lenin: They'll sell us the rope with which to hang them.

Obama: We'll buy the rope from you, and build you the gallows for free, with which to hang us.

[familyop]

"And I’m not talking about policemen and firemen..."

I would. They and other local government employees get enormous federal funding and use it to become addicted to insane methods of taxation/thievery ("impact fees," etc.) and to stop attempts to start new, small, domestic manufacturing operations, even in remote rural areas. In some locales, government employees, appointees and politicians are spending some of that funding on casinos, prostitutes, expensive resorts, etc., and getting away with it, because they're repeatedly reelected by hordes of local government pensioners.

Socialism is a bipartisan effort, and none of it will stand for long. So go ahead, folks. Continue to raise those debts, fight real men who would do real work and ignore the consequences to come.

[RowdyFFC]

Well, then I’m glad to say I don’t live where that happens. Where I come from taxes are raised by referendum and our equipment is purchased with legitimate bonds, not federal grant money. We have a definite aversion to the strings attached to federal money. And we have no truck with organized union government employees.

[familyop]

"Well, then I’m glad to say I don’t live where that happens. Where I come from taxes are raised by referendum and our equipment is purchased with legitimate bonds, not federal grant money. We have a definite aversion to the strings attached to federal money. And we have no truck with organized union government employees."

Well done! That's something to be proud of, for sure, and your community will continue to provide those services through rougher times. I'm on the Rockies in a very sparsely populated, remote County, but it's administered much like a large, coastal city: very regulated and unfriendly. ...tens of millions in federal funding for one year with taxes going down very reluctantly and not much despite the real estate bust.

[familyop]

I grew up in the south part of your State for about 12 years, a State that used its revenues very well then (greatest highways, for one).