By Fareed Zakaria, CNN
A new poll in the United States shows that Americans are still deeply frustrated at the slow pace of the economic recovery. That's understandable. Unemployment stays stubbornly high. But I was just in Europe, and they think America is booming.
Consider this: the U.S. economy is on track to grow between 2 and 3 percent this year. In Europe, by contrast, half the eurozone economies are going to actually shrink this year - and not one major European country will grow over 1%.
Last Thursday, Christine Lagarde, the head of the International Monetary Fund, and former French Finanace Minister of France, said there were "dark clouds" hanging over the global recovery and that the eurozone was at the "epicenter of potential risk." Borrowing costs for countries like Spain, Italy and Greece are rising again.
What is going on? Didn't it look like the Europeans had managed to avert a crisis only a few weeks ago?
Yes it did. Mario Draghi, Europe's new Central banker, had adopted a version of Ben Bernanke's policies and injected money into the European financial system and economy. But his efforts are now being undercut by the German Bundesbank, which reflects Germany's obsession about inflation even at the cost of growth.
The larger failure, shared across Europe, has been too much austerity.
Consider that data we started with. The U.S. economy, which received monetary and fiscal stimulus, will grow at well over 2% this year. European economies that have followed the path of cutting spending and raising taxes to reduce deficits are finding themselves in a downward spiral: cutting spending means laying off people, which means less demand for good and services, which means the economy shrinks, which - ironically - means lower tax revenues and thus larger budget deficits.
Take a look at Britain. Britain has followed a brave austerity plan, cutting government spending across the board and raising taxes. The result, British growth has stalled; the economy will grow barely 0.8% this year. And while its budget deficit was predicted to be under 13 billion dollars in February, it was in fact 24 billion dollars for that month alone.
After its austerity programs, Spain has hit 20% unemployment - 50% youth unemployment - and now has a much larger budget deficit than projected.
Europe needs structural reforms that will cut spending over the long term - by raising retirement ages and cutting benefits. But it also needs pro-growth reforms that open up its labor market. But most importantly for now it needs to stop imposing austerity in a depressed economy and learn from something from the example across the Atlantic. Two or 2.5 percent growth might not look so great in America, but it's a lot better than negative 0.3 percent, which is the current estimate for the eurozone's economic growth.
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When a country's economy hits rock bottom austerity measures are inevitable. But they create recessions and unemployment. When people can't pay taxes, they have to claim benefits. It's a vicious circle. A government has no choice but to cut back how much to borrow. Some resort to reducing deficits others to raising taxes.
People have very short memory. Has everyone forgotten the subprime crisis? Lehman Brothers? Perhaps Europe has shown too much austerity recently. But hasn't the US been printing too much dollars? 10 years ago, the USD/CAD ratio was @1.65. Now it's 1 for 1. 10 years ago, the EUR/USD was @0.80. Now it's @1.33. Suppose the Eurozone doesn't fall apart. Suppose its economy gains some momentum. What will happen to the greenback then?
What other function does fluctating a government currency have other than to embezzel it's citizens ?
Someone must have hid the prior post concerning the fluctuating currency to jump out.
As usually you are leaving out alot, in Jan 02 when the euro was introduced it was at .88 to the dollar, but by the end of the year it was at 1.01, was at 1.20 by the end of 03, 1.50 by end of 04, back down to 1.20 at end of 05, 1.30ish by end of 06, 1.60 by end of 07, around 1.25 by end of 08, back up to 1.50 by end of 09, 1.30 again by end of 10, back up to 1.40ish by end of 11 and now is back down to the 1.23 area. IE: it blew past us years ago and has been up and down ever since.
The thing about the Canada/US relative situation is that Canada addressed it's budget deficit 10 years ago while the economy was good, not during a recession. As a result, the national debt per capita was 1/3 of the USA's when the recession caused by the poorly regulated and criminal American investment banking industry. Canadas banks didn't require/extort a multi trillion $ bailout. Should I continue?
John Mason, hit the nail on the head. 15 years ago where were the "fiscal conservatives" in the US during our real "Boom" when we had surplus after surplus. Instead of gradually paying down the national debt and working on aging infastructure, the GOP (who was running Congress at the time) went ahead and increased spending on "their" programs and pork bills.
When your Booming you should negate your debt and control the growth so that it's stable. And when your in a recession you shouldn't cut things that promote job growth (increased taxes on the lower brackets and small business{they are the ones buying all the goods}). Let's face it conservatives are just as culpable as liberals for this mess. Balanced budget Amendment? How about Congressional term limits? If no matter what they had to find jobs like the rest of us in 8 years, we wouldn't have 8 years of recession. All this has been is a decade of power struggle.
The Greenback will be just fine. We actually, are in a much stronger position internationally with the Dollar what we were three years ago If the European economies strengthen our economy will be stronger. That is because the European mistakes are dragging down our currancy not just theirs. We do a large amount of trade with Europe and when their economy is weaker we do less trade.
Well Martha, guess we'll just have to sell the farm. Pretty sure I saw a few of those China men yesterday staring down the Douglas place up for sale just across the way. Who knows, but I reckon there could be a few more of them might be interested.
China actually owns about 7% of our debt. They are not a huge threat.
Europe needs to push back retirement ages. The US should only pay social security to US citizens 65 and older; social security is for retirement–not for disability. Tax exemptions on both sides of the pond need to be abolished. I think Europe should consider abandoning the EURO.
"social security is for retirement–not for disability"
We support the disabled with Social Security, some other safety net program, or we abandon them. Why does it matter which program supports them? It's still spending no matter what you call it.
Marley's Ghost will be coming to visit you soon, qq!
Push back the retirement age? Do you have no clue? Take Spain for example... 20% unemployment and 50% youth unemployment. What is expanding the workforce going to do except create higher levels of unemployment?
Pushing back retirement ages means there are fewer jobs for the younger worker. And this helps how??
No Social Security Disability or widows or orphans because you think it should only be for the aged? Sorry but that isn't how it has been for ovver 50 years. It is self funded and doesn't take a dime from the treasury and is solvent. So why should we not pay disabled workers who have paid into the fund?
I have been working in US for the past 13 years paying taxes and Social Security. Should I not receive Social Security one day just because I am not a US citizen?
I began drawing SSDI at 59. I would need to be 82 years old to have drawn all that I paid in – IF CONGRESS HAD NOT STOLEN FROM THE SOCIAL SECURITY TRUST FUND OVER THE YEARS! Now Obama intends to hijack not only that but also rob several other trusts. Wonderful.
You spout the policy dogma of both the neocons and the social progressives although they use different terms for the same robbery.
Absolutely false. Read Murray Rothbard's treatment on the Great Depression to understand the true cause of the perpetuation of downturns (and the cause of downturns themselves). He has proven that austerity accelerates recovery, and that stimulus perpetuates a depression (i.e. the New Deal that forced poverty upon us for 16 long, miserable years until the economy recovered in 1946, when all those policies were reversed).
Rothbard? Rothbard didn't prove anything because Austrian economics can't prove crap. This is why it's relegated to the wastebasket of economics except for some people who find it compatible with some ideology.
Incidentally, what's up with libertarians and cognitive dissonance?
He didn't prove anything, he has a theory. If anything it has been proven once again, that austeritiy prolongs recessions and depressions. The Us put a modest amount of stimulous into the economy and we are recovering. The Europeans have cut back and are lagging. People don't have the leisure to wait for the Austrian school of economics to be proven wrong once again . They have mortgages to support families to feed and retirement to be funded. Austrian school was what we had in the US before The great depression, and people literally starved to death.
it really bothers me when people bring up the new deal and say it prolonged the depression without bringing up FDR cutting back gov after the new deal to appease deficit hawks. that is why we had a recession after the great depression. as someone had stated in another comment, what do you think happens to the economy when you fire a bunch of people?
MJ,
The Great Depression began in September of 1929, when the Stock Market crashed. You conservatives want us to believe that the economy would have recovered quickly except for FDR's intervention. They conveniently ignore the fact that FDR was not inaugurated until March 1933, by which time things had only gotten worse. How long, exactly, should we have waited for the magic of the Free Market to solve all our problems? Is four years not enough?
MJ, please do not be offended, but your post is utterly incorrect.
Hoover was only one year into his term when the 1929 collapse occurred. He attempted to utilize austerity measures, and made no headway with the Depression.
Roosevelt, who also disliked stimulus spending, initiated them anyway (starting in 1932), recognizing that austerity measures failed. The US economy began to recover and Roosevelt then reverted to austerity measures, causing a worsening depression.
Ultimately, World War II started in 1941 for the US and the subsequent war spending (in effect an incredible stimulus) led to a booming economy. Following World War II, large scale US spending continued, in the form of a massive national interstate system, a little thing called the Korean War, the GI Bill, an incredible influx of federal spending on education, and so forth.
The reason countries need austerity is that they spend more than they take in for extended periods. Greece, Italy, Spain, etc. One can ignore that and end up like Greece. Or one can address the problem and end up with a lower GDP and unemployment, temporarily, or, like Greece, one can keep on spending money that is borrowed. Until the country cannot borrow any more.
Austerity does not create unemployment. Government spending and large deficits cause unemployment. Delusional.
d
Zakaria please close your mouth and stop spreading bad propaganda for Europe.You have to teak History class first than BE, WHO YOU WHONT TO BE!Hvala puno i pozdrav do sve YUGOSLOVENE .
Hello USA. Vote in Obama again and we'll be there in no time. The libs got it dead wrong, cut spending AND taxes. It's a no brainer. It's hilarious that this guy tries to justify 2% growth by saying, it could have been worse. Just Obama saved the US economy from the brink. Haha what a joke libs are
Many Americans have invested in the Iraqi Dinar (IQD). Do you know what the hold up is on why it hasn"t revalued yet? I"ve heard this can have a very positive effect on eurozone.
LOL The hold up is you got played.
LOL, when I was deployed to Iraq I saw hundreds of soldiers spending their hard earned money on buying Iraqi Dinars by the truckload because a friend of a friend of a friend said that one day those dinars would be worth millions....Guess what? I didn't buy any because its all a scam and major one at that....
Soldiers bought the Iraqi dinar as novelty items, not for investment.
Lemme guess... Soldiers in Iraq are very savvy when it comes to world economy. They all have MBAs and Ph.D.s from the best universities in America, right?
Actually a lot of soldiers are just that or have the potential for it. Specially the handling million dollar equipment
Despite the persistent threat of military strikes at the hands of either America, Israel, or both, Iranians from Tabriz to Shiraz talk more of the lack of new jobs and soaring inflation—officially said to be 21.5% but widely placed closer to 30%—than of looming war.
The manager of a big hotel in Shiraz says that since the Persian new year celebrations, which began on March 21st, occupancy rates have hovered at between 30 and 40%. In most years you cannot get a room without booking in advance. His main concern about the talk of war was that it scared tourists away.
With the European Union set to halt all oil imports from Iran from July 1st, and Iranian officials scrambling to find new buyers to make up the shortfall in foreign-currency receipts, many believe that unless Iran backs down on the nuclear issue, today’s hardships may be only a foretaste of worse to come.
During the last decade the US dollar has been the worst investment of ALL. It has kept falling and falling, and the US has been flooding the world markets with truckloads of greenbacks. I can tell you that no one I know in Europe is thinking that the US economy is booming. I wonder where Mr. Zakaria got his info from. It looks to me like some home made propaganda.
That's how we get you to pay for our nice stuff. Thank you.
I don't know if I should watch TV on the 4th LCD flat screen. Or get on the internet on the 6th PC we have in the house. Maybe I will just head out to the beach and sit on my China made beach towels. Thanks again.
We plan to print more paper for you to work for next week. Please work harder.
Print more paper junk, eh? Well, you know, it can be somewhat useful in the bathroom, actually...
Enough. Back to work. All of you. Back to your cubicles immediately.
Something to keep in mind is that a weaker dollar – which has been the official policy of the US for the past 20 or 30 years – make US export cheaper. Cheaper exports means that foreign markets buy more of our goods. That increased demand turns into more jobs here in the US and growing manufacturing base. You'll notice that exports are up and jobs in manufacturing are also up. So you can have a strong dollar and weak exports or a weaker dollar and strong exports. What is your choice?
During the last decade the dollar has risen and it has fallen the dollar today is stronger than it was in 2008 and stronger than it was in 1997 Sometimes it is stronger and sometimes it is weaker. That is the nature of international currency.
So what, are we supposed to be grateful that we are in better condition than EU countries? You also have to wonder why the elites in the US are in such a mad rush to follow the EU lemming over the economic cliff.
No you should be grateful that your situation isn't as bad as the situation in Europe....Also maybe you should actually open your eyes and realize things are not that bad here.....Do you realize that President Obama has increased American exports by 35% and that number is predicted to grow to 45% within a few months? Did you realize that several overseas companies are climbing all over themselves trying to get American companies to send consultants overseas....America is doing well, not as well as we have been doing, but we are on the rise....
wow you need to lay off the koolaid. odumbo hasn't increased exports he has crushed exports and as far as growing exports... to what country? did you read the story? the only thing that is going to help this country is getting someone with experience in the REAL business world to run the country not some organizer with ZERO private sector experience that only knows to spend more and more and more.... Romney 2012
You must be black.
mike, this country is not a private sector...What will romney do? sell some poor states to China and invest on the other ones ? you are just not really smart, probably a scared little guy with guns. it's ok.
Hey Mike I'd love to see you cite some hard numbers to support your bulls*** claims. Otherwise you're just another tinfoil hat wearing internet dips***.
Mike, this far right fantasy that we need a "business man" to run the country is naive. You don't see airlines begging for pastry chefs to fly their planes or hospitals trying to line up successful bankers to perform brain surgery. Nothing Romney did in business is of any use when it comes to running this country. He can't split up America and sell off the states that aren't turning a profit.
Bill,
Are you saying that I should be grateful, because "we are better off then Europe" when I have been laid off since 2009 and haven't work since? God knows, I love working (I feel better about myself) and I have been looking for a job ever since. My problem is not my ability to do my job, but I won't be getting hired anytime soon, until all the other people in my profession are hired. I have a disability, so employers are going to hire every one else before they are forced to take a risk with me, even though, there's very little to do so. I can't easily pick a new career due to my speech impairment and not having the strength of a normal man, that alone rules out 99% professions out there. But, I will be grateful that "we are better off then Europe". Yes, you can read sarcasm into that.
Aezel you and the other guys are completely ridiculous. The guy ran a state that was in the green. He had Mass running very smoothly. On top of that he is a smart business man. He fixed the Olympics which was headed to be one of the worst in decades. The guy might not have a knack of seeming to be "normal" like the rest of us but he has more smarts on how things should work then Obama has in his pinkies first knuckle. Most people like him dont always seem to be smooth in life. But I rather have a doer then a b.s. talker
You forgot to mention that his exports are american jobs going overseas....
Mike, your data is off – and off a lot. US export are up and up significantly. Manufacturing jobs and that entire sector are up as a result. Maybe you don't want to believe that but it's true. You can find the data for that most anywhere. So could you show us where you got your information about falling US export?
Also, to the guy who said the only exports are jobs going overseas. You may not realize this but a large number of companies are cutting down on their exported jobs and bringing them back here. Again, there is a lot of data to support that.
In better conditions? With a national debt of almost 16 trillions? Come on! Isn't California (and many other states by the way) technically bankrupt?
ya i'm sure thats why ever time the republicans are in office the national debt shrinks? oh wait ... it doesn't they run a deficit, last i checked only pres in recent times to actually bypass a deficit even for a small amount of time was Clinton... a dem... obama got handed a country in financial turmoil with crashing markets BY A REPUBLICAN! Why is it you repubs always forget this obvious fact.
Hurrah.....finally coment from you, that isn't just blah blah blah "we're better".....California has strived to be Europe for so long that it has socialized it's economy and stifled it's productivity and inovation to better the common man (sound familiar? ie the welfare state). You should hold California up as the modern European dream with the highest business tax and soon to have the highest VAT (or sales tax) with it's 40% wealth tax on top of the Obama/Buffet plan just to support the disenfranchised and unproductive poor....Austerity at it's best and most Europeanized.
Do you really think that this plan is going to create jobs or wealth? Because I think, like Europe, it will only create people who don't know how or wish to do anything but stand in line for their next check and complain about the haves who live in another state.
America is not in a "Boom". Government just wants the "have-nots" to believe that so they can use their anger to create income redistribution tax laws which will only really redistribute to government pockets.
California, that's the one where they don't teach US history in the colleges, right? That's the state that republicans make up scary factoids about to support their wierd arguements.
Mike: per US exports – US Statistical Abstract 2012, table 1307
1,056,043,000,000 (2009)
1,278,263,000,000 (2010)
And, U.S. goods and services exports in the first quarter of 2011 are up 14.9 percent US Department of Commerce).
Floretta,
Stop confusing them with the facts. They will only accept the ones manufactured by Faux News.
Fareed, I'm oftentimes not in agreement with you; but, for once I have to say you've made an excellent point. It's a difficult balance...
-Voldemort
Bullcrap!
The problem isn't "too much austerity" – the problem happened decades ago when Europe engaged in "too much opulence". The "austerity" now is just the second-half of the same ball-game.
Dude, I lived in Europe for 8 years. The one thing they were not in comparison to us Americans was "opulent".
Have you ever even been outside the country?
Opulent in regards to their unsustainable social programs, unemployment, and retirement benefits as well as work rules that hamstrung employers.
Yes, MilitaryBrat, I have – all over Europe (though not for 8 years). I meant "opulent" relative to their previous lifestyle.
In other words, they spent faaaar more money than they had, or could sustain, or hope to repay. Now the chickens come home to roost and they have to go through extreme austerity – the "second" of the ball game, so-to-speak.
If the Euro increase in value over the past decade, how did the government officials have to borrow ? They were in cahoots with the correction, which was to sustain the corrupt old money in criminal power.
Thats why their bitting their tail.
The blood letting will continue until the patient improves.
and Obama wants the USA to be more like socialist Europe why...?!?!
Umm...the unemployment and economic stagnation are from Europeans austerity programs , i. e. cutting spending....that sounds more like what republicans wants.
Right, Europe's too conservative
Austerity (as a government fiscal policy) is not "conservative". It's a policy that allows a politician to act as though he has the virtue of being willing to suffer in order to fix the problem, when in reality, he is willing to allow others to suffer, and not fix the problem. Conservative policy in that situation would be very careful, well justified, effective spending. Problem being, that takes work, thinking, and doesn't align with the fire and brimstone side of the evangelical faction of the party that currently claims to be conservative.
Republicans have chided democrats for "tax and spend" but I've always wondered, with spending being inevitable, what's the alternative? For most of my life, back to Reagan, the answer to that question has been "spend, borrow, and spend".
Obama want America to LEAD the world in the next generation of technology. Check out IBM's new battery that breathes oxygen and can run a car for 500 miles. I'm liberal but I'm also very proud of America's ability to innovate and solve problems for ourselves and the small planet we live on. Obama is no socialist and even if he was, he's be a very mild one that was concerned about equal opportunity for all. Europe has now become better than us at providing opportunity equally...that was supposed to be our thing. So give our older brother Europe some credit and concentrate on using the best ideas from wherever the come from.
amen
Europe thinks America is booming because of Obama's economic decisions. Imagine where our economy would be today if Obama, as most republicans suggested, allowed GM to go belly up. Obama is for a balanced economy. Taking away the middle class purchasing power would be following on the European countries footsteps. Obama has rejected the European economic model for a more pragmatic approach.
And here SAK ATAK shows us, with our own eyes, the power of propaganda.
Only in Rush's eyes does the President want the country to be socialist. How about using your brain, rather than being a parrot of the extreme right?
Please explain how he has not attempted to emulate Europe. His goal he said himself was a single player system that even his supporters want. Check. He wants to grow federal spending habits. Check. Higher gas prices. Check. More unionized labor. Check. Outrageous deficits. Check. "More fairness" and "Fair share". Check. Please I would really love to hear you address each and every one of those points.
I think you just got burned, Luder.
Grey – that's single "payer" not player, as in Medicare. Most of the civilized world, in and out of Europe, does this and it works better (and cheaper) than here. I used to be a billing clerk and Medicare was by far the fastest and most efficient of all insurers e.g. the "Blues" (Blue Cross Blue Shield), Emdeon (everybody else) and private pay. Their automated system would alert you to possible claim errors BEFORE you filed them, for correction. They paid within 15 days. Given the size of the system the rules were clear and well understood; not so for individual insurers. We might have 40 patients with "Blue Cross" coverage but they weren't all the SAME Blue Cross – each region/company has its own coverage and exceptions. Private insurers are like snowflakes – no two are alike. This means every claim for the same treatment can be different, within certain parameters. This way lies madness, which is what we have now. Half the time patients didn't know IF there was a co-pay and HOW MUCH (which can change at any time, btw.) One payer, one set of rules.
How did he get owned, when none of those questions is about socialism? If you want to accuse the president of being socialist, you really ought to find out what socialism is. It's not single payer health insurance. It's not income taxes. It's not everything that is "fair". It's not even unions. Go do some reading (also, not socialism) and find out what you are talking about.
Once you have done that, maybe you can help me understand how capitalism can continue to work in an economy where most of the population is not employed doing any activites that produce actual goods. Capitalism was great in the early industrial age, and worked well for the industrial age, but the US has passed out of that stage of economic development, and some of the fundamental assumptions of capitalism don't hold up well anymore. Good thing we cling to them, thinking that they are somehow connected to our religion and the concept of democracy.
Grey, I don't know where you got the idea that Obama wanted a single payer system. When the debate was happening Obama said that a single payer system was *not* an option. In fact, it was never considered as part of the law. That being said, a single payer system supplemented by private insurance for those that want and can afford it makes more sense. It would bring costs down. You may not be aware of this but every time someone who doesn't have insurance goes to the hospital and can't pay their bill you and I end up paying for it. The previous system is perhaps the most ineffecient solution we could have. So you have a choice – stick to your ideology and pay more and more or show some adaptability and cut costs. Which is more 'conservative'?
Single-payer was on the table back in the 90s. Republicans argued against it then, suggesting an individual mandate instead. Fast forward to today: Obama has implemented the REPUBLICAN individual mandate, and the republicans now oppose it. Why? Because Obama supports it, no other reason.
Single-payer would probably be a superior system but no one has the political capital to push for it at the moment.
So you think that corporations, especially global megacorporations, can take endless streams of American tax money for their overseas expansion with no obligations to American citizens who have been supporting them for decades? You want to stop socialism in the United States? Get global megacorporations off the dole.
austerity is the opposite of socialism. so obama wants us to be the opposite of a shrinking economy. love your logic.
It would be nice if people didn't think in cliches. Look, the US subsidies the oil indurstry, the military industry,the agricultural industry: corn, peanuts, dairy, the transportation industry, you name it and no one screams socialism. Let the government says that you should pay for your health insurance (hardly a socialist concept), and some people are screaming that the government is taking over 16% of the economy, We don't live in a purely capitalist society. Actually, we never did. It was more than a hundred years ago that Theodore Roosevellt saw that the country could not afford to have huge monopolies rule the country, that industries had to be regulated for their own good. All industrial countries nowadays are a mixture of free-market and government intervention (even China is getting there). So, in this sense, there is no country in the world that is not "socialist". If one does not want 'socialism", then he must give up on Social Secuirty, Medicare, unemployment compensation, disaster relief, aid to dependent children, highway building, space exploration, the subsidies I mentioned above, and God knows what else. Not even the most rabid conservatives are suggesting this. What they are suggesting is cutting down on them, not eliminating them. The only thing they propose is that if we give more money to the wealthy and corporations, these people will use the money to create jobs? How many jobs did the Bush trillion dollar tax cut to the rich created? They will take the money and follow Romeny to the nearest tax heaven in the Bahamas or put their business in the Orient where they will pay workers 80 cents an hour.
You need to post more
What BS!!!!!! Obviously you ARE socialistic!
Paul – Thank you. You are 1000% correct.
Critics – Yes, I intended to write One Thousand.
If we in the U.S. are in a boom cycle and Europe is on a bust cycle, then why is their euro worth so much more than our dollar? The euro is at 1.31 to our dollar.
Because the Euro at one point was worth almost 2 dollars to the euro bfore the recession. The dollar has been getting stronger versus the euro since the recession began and the recovery.
The euro peaked at about 1.60 to our dollar around 2008 and yes, it fluctuates, but it's been fairly constant at around 1.30 to our dollar for a number of years now. Unfortunately for those of us who like to visit Europe.
I haven't checked recently, but if it's at $1.31, it's down. In the last four years or so, it's been between $1.38 and $1.44 when I've had occasion to purchase. Currency doesn't always follow any one factor.
The value of a countries currency doesn't have a link to their economy. Look at China. They purposesly kept their currency low so more would buy their products, because they were so cheap. The dollar is being kept low right now to also make our goods cheaper than others. We don't want an exceptionally high currency. That will make everything we export very expensive and people will look elsewhere. We want our curreny to be moderate so that we can purchase on the global market without too much loss and still sell as much of our goods as possible.
Economics 101, currency value is an economic tool (or consequence).
I understand that it's a complex issue and that currency fluctuations don't always make sense. But historically, when our country's economy was riding high, our dollar was riding high. That no longer seems to be the case. Europe's economy is in the dumpster but their euro is riding high, in fact doing much better than our dollar. I guess it's pointless to even try to make sense of it.
Dylan, which means it is more expensive to buy anything made in Europe by anybody outside Europe and less expensive to sell our products outside the country. So...buy American.
As your studies advance you find that most of what you learn in the 101 level classes is only occasionaly relevant. In 101 you learn the basics, and in 401 you learn the details that often apply in complex, real world situations. Trying to apply 101 type lessons where they don't apply leads to disaster.
China has, for years, forced the value of their currency down. This has made it impossible for other countries to compete with them in several ways. That's an interesting and effective strategy, but it can be very effectively countered. If their competetors drop the value of their currencies, China loses that advantage, and most of the progress they have made in their own economy. The most extreme example of that being in terms of US debt. The US could create new currency to pay the debt, at the cost of devaluing the dollar. Paying that debt is easy, Print up a stack of trillion dollar bills and send them to china, along with a request for a zero-balance letter. Every penny that china lent us would be, effectively, gone, erased by the collapse of the US dollar. It would hurt the US, but it would crush china. The value of the dollar has been declining, you think that's an accident? That's a warning. But the simple answers are easier and fit better with what you picked up in the 101 class, so, stick with them. Much easier to deal with.
The reason why a lot of Americans still think our economy is bad is because the GOP wants you to think it.
It's political positioning for 2012.
The worse the perception the better their election.
i think most republicans think our economy is bad because the unemployment rate has stayed above 8% for the longest period in our history, and real unemployment calculated llike it used to be is abotu 19%, We have 16 trillion dollars in deficits, record bankrupcies, record home forclosures, and no plan to get us out of any of this
your comment is not true. Anyone with a 7th grade education knows unemployment hovered around 20 percent for ten years during the great depression. It would have likely stayed above 10 for another decade if it was not for WW2 and federal spending.
And most of the blame for the economic meltdown of 2008 is clearly on Bush not Obama. None of Obama's policies or budgets started to effect things till 2009. When the economy started to recover !!!!!
Actually, most of the fault lies with Alan Greenspan. It also lies with Clinton and the 2000 congres for passing the Commodity Futures Modernization Act. Also, the bubble (and collapse) would have been impossible without Fannie and Freddie, who created AAA securities out of junk loans by guaranteeing them. Out of control spending under Bush certainly didn't help things, but most of the blame lies in the Fed's denial of the problem until it was too late.
Keep in mind that WWII spending that got us out of the depression increased federal debt to a higher percentage of GNP than it is now. Also keep in mind that the bulk of federal debt is to U.S. citizens, not foreign countries... the Republicans are howling like banshees... with as much sense. Note how they never howl about corporations sending jobs overseas, reducing our taxable incomes, and tipping the trade imbalance against us. Nope... those are pork barrels for corporations and anathema to citizens and taxpayers.
Agreed. Greenspan turned out to be a disaster for this country. He himself explained why. He trusted in business, and the invisable hand. He thought that business would act in that magical enlightened self-interest, with an eye towards the long term future. As it turned out, business is driven by a lot of people chasing quarterly bonuses that are based on short term metrics, and those people would do whatever it took to make those metrics as good as possible. Shipping all our jobs to china made for great quarterly bonus metrics, even if does mean there are no jobs here now, and jobs means no one to buy our products anymore, or anyone else's products for that matter.
SAK_ATAK your ignorance is astounding
So is how absolutely meaningless that comment was.
Your comment on Spain confuses the causality. The previous Socialist government (ousted in November 2011) barely undertook any significant austerity measures. Only recently (in the past three months) have major spending cuts and labour market reform been passed. So the larger-than-predicted budget deficit is scarcely a consequence of austerity, but a major cause thereof – and it was produced by ineffective deficit spending measures promoted by the Socialists.
Other than that, I have to agree – though Germany's persistent phobia to inflation will impede any efforts at demand stimulation by the ECB.
The age-old problem has two answers, and both of them are "wrong." If you're heading into a "recession" should you cut government spending or raise government spending?
Cutting means removing some of the spark plugs from the engine that drives the economy. It means fewer direct government jobs, and fewer government purchases, meaning less work overall, meaning fewer jobs and...ultimately...more unemployed not paying taxes and needing government assistance. The net is that the deficit might go down a little but then will rise again.
Spending means making the problem worse, mainly because, at least in the short term, the government is increasing the deficit. However, it also means generally higher employment than the other option, which means fewer requests for assistance and a largely tax revenue pool.
In short, the answer is a question of long-term vs. short-term, and both rely on "hope" that the whole thing can be "managed." Since the economy on a "country scale" can't truly be "managed" it means you are left with no really good choices. Of course, in the US we could start by simply saying everyone needs to pay a share of the load...but the GOP doesn't believe that. Remember, if corporations are people, as Mitt seems to believe, explain why GE, making billions in profit, pays no taxes whatsoever, and, in fact, books tax credits they carry forward? Yeah, that's a fair system!
Right on Craig!
The problem is, Democrat's didn't believe in cutting spending during the boom times either.
Also, the bursting housing bubble brought on by the CRA was not instigated by GWB – in fact, he and other republicans wanted MORE oversight of Fannie / Freddie back in 2004, yet they were stonewalled by the Democrats. Search YouTube for Maxine Waters, Dodd, and Frank all praising how well run Fannie and Freddie were and how this was just an attack on the "poor". They seemed to think lending money to people that could not afford to pay it back was a great idea.
Fannie and Freddie didn't call the housing "bubble" to burst... what nonsense. The derivatives market that bundled mortgages and sold them to 5 or more difference buyers (as insured securities)... REQUIRED a collapse so that the banksters selling the same securities multiple times (fraud) to be paid off by insurance. There are over 4 million acknowledged illegal foreclosures as a result of this. Banksters initiated the collapse to make the waters murky and stay out of jail. It worked... for the banksters.
Mad ups for an educated comment without (much) personal bias!! That's how you do it, tell people what the choices are and what the consequences for both decisions are. Each side believes that their plan will work because of what you said, then after that happens people will do X or Y. Then the other side says that their opponent's plan will fail because "no, people will do A and/or Z instead!" It's ridiculous, they both work well enough on paper. I have my personal beliefs but I'm sure someone else expressed them, they're not outlandish, so I'll save you all the time
Well said
I went to go sell my beloved civic SI for a new civic for my new wife since we are pregnant and I have to tell you that both dealers that we went to were standing f'ng room only. I have never seen more people out buying cars in my life. The DC area is booming. Houses under 300k are also flying off the shelves. I know DC is not indicative of the rest of the country but this area is more nuts than I've ever seen it.
Well yeah all of our tax dollars going to Washington DC so that a few can live better than the rest of us. DC is nothing more than a sewer sucking our money for nothing.
Sure, DC is booming because they are sucking tax dollars from the rest of us. That is the problem with many of the government programs – look at the overhead. The current GSA partying is but a recent example.
Consumer spending has been increasing for awhile now. It's only been on smaller purchases at the moment, with automotive sales being the biggest purchase. Some of that has to do with gas prices as well. Housing will pick up once more people recoup their dwindling savings and change their financial habits, also continue working on getting out of debt. Right now is the best time to buy a home because the rates are low and the prices are low. Our economy is no where near as bad as all these fear mongers want you to think. We do still need more employment, but we gain jobs every month. We can't expect the gains to be extreme because they won't be sustainable at a high rate. Slow growth is easier to maintain in the long term than rapid growth.
And which investors are going to throw their money into a -0.3% sinkhole? The alternative to austerity is throwing more good money after bad and we see how well that's working.
Europeans by and large don't think the American economy is booming. We're just doing marginally better than the Europeans. Countries like Canada and Germany which embraced difficult reforms years ago are doing well. The best of the OECD countries in terms of growth. The European countries who now are in the worst shape are the ones who spent the most Greece, Spain, Italy etc all spend far beyond their means all are now paying for it. France spent a great deal when the Crisis hit France doubled down on government spending. Its debt to GDP went from 64% to 90%. Its bond rating declined. So the French followed the Keynesian prescription and now they are paying for it. As for the U.K remember in the U.K government spending accounts for 50% of GDP. They can't increase spending that much more because there is nothing left to spend . They have run out of other peoples money. What gets missed in this is that for years the European countries in good times and bad have increased spending, increased taxes, increased benefits so that when a deep crisis hits like the one we're experiencing now there is no room to grow. The Europeans are paying the cost for years of profligate spending, high taxes and low growth. This is the direction Barack Obama is taking us to.
Mike,
I'm not a raving Obama fan and don't claim allegiance to either party but I find it amazing that this dumbed down talking point about "Obama driving the US towards European Socialism" is still in play. Can we put this to bed now? Obama has proven to be a center-right president in most substantive ways, in the manner of a Reagan, a Clinton and a GH Bush. I would argue that in historical context, there's nothing to suggest that any US leader in modern times has tried to take the country down a path to "socialism". Healthcare is still private under 'Obamacare' (for good and for ill) and this is often touted as an example of a government run takeover. This is simply inaccurate and only serves to whips up the simpletons who choose to get their news from dubious sources...and I include both the right and left wing opinion media that too often stands in for "news".
Anyway, I'd like to suggest a moratorium on the notion that the current administration is on some fantasy path to a Swedish style model of government. It's just plain wrong.
Regarding your statement "Obama driving the US towards European Socialism" being put to bed....You perhaps missed the fact that Obama stated that we need to make changes to 'enjoy the benefits of enlightened European Socialism"
(I'm capitalizing Left and Right where appropriate)
And that is exactly what he has been doing. As to your statement that he is 'center-Right' ... that is absolutely laughable, and one of the more egregious lies perpetuated by the Left. Unless, perhaps, you are so far to the Left that you can't even see the center, and anything or anyone that doesn't fall within your definition of what should be is too far to the Rght ... which is likely.
More from the Saul Alinsky playbook on how to handle the Right. Sad, really.
Well that's not an accurate statement. The only reason it wasn't government run healthcare is because the legislation failed on that iteration. So instead of killing it outright, it's just a timebomb to wipe it out later down the road.
TAJW – I went all over the internet regarding your "enjoy the benefits of enlightened European Socialism" quote.
Source or it didn't happen.
Can any of you actually explain, with examples, why/how he's driving us towards socialism? "obamacare" is far from it, if there was a government run option people could pay in to, you might start to have a point, instead it's just a set of regulations. Which is something any true government decides it needs to put into place on various markets.
I don't know much about his other fiscal decisions, but many of his stances do place him in the right. I don't understand why republicans can't give him credit for things they'd love to do but he's done it first. For example, fighting to keep the option for warrantless GPS tracking. How about expanding the drone war and taking the dubious stance of ordering the death of an American citizen, without trial, by drone strike in Yemen?
Admittedly, I haven't followed all of his decisions so I can't say for sure where he lies on the political spectrum, I do know that, as a Democrat, he's been disappointing. Oh well.
As for the OP, quit comparing America's high spending to Italy's, Spain's, Greece's, Portugal's, or Ireland's. The difference between us, though we do have a ridiculous deficit, is that we still possess solvency. Higher taxes or lower spending can fix it without reducing the citizens' and/or the government's lifestyles to bare bones. As has been said by other commenters, America's debt isn't even mainly foreign owned. A lot of it is owned by citizens in bonds and such. Please try to see through any-ANY news source's bias and do your own research. As for statistics, remember what mark twain said. There're lies, damn lies, and statistics. Including my prior point about who owns our debt, I'm certain I'm not looking at it from all relevant angles.
There is at least one major problem with Zakaria and most liberals when this topic is discussed. They want to pour huge amounts of "stimulus" on a down economy in order to "FIX' it's problems. MORE DEBT. The problem with Zakaria and Krugman is they need to show when this debt EVER gets bought back. It never does. Just grows. Their next piece of brilliance is to keep raising taxes higher ( especially on the productive segment of an economy – if there is one ). Adding expense to a recovery. PERFECT.
Bob,
So maybe in your infinite wisdom, you can tell us all the reasoning behind not raising taxes when Bush engaged in two wars? Where was the money coming from? China, of course, with interest. What school of economics did you graduate from anyway?
The national debt relative to GDP at the end of World War II was very similar to the debt burden the U.S. has today. What was the solution back then? Not austerity. The solution was for the federal government to spend money on building the nation's infrastructure and educating the returning G.I.'s, among other things. The jobs created and the more efficient system of roadways, bridges, dams, and power generation helped grow the economy and pay down the debt. The only thing preventing the same type of solution today is the ideological hang-ups of the GOP. They deliberately ignore the success the U.S. had in paying down the WW II debt through spending expansion because it doesn't match their talking points.
bingo!
Bob, neither Zakaria nor Krugman think that the stimulus will cure the deficit. They argue that you can get the economy going with a stimulus so that when it gets going, measures can be taken to work on the deficit. They argue that by cutting down, like firing teachers, office workers, policemen, etc. you are taking these people out of the economy and the money that they can't spend will effect grocery stores, furniture stores, car dealers, etc. who in turn will need to fire some employees to stay alive. Thus, you create a downward cycle.
What happens in these discussion is that no one tries to understand what the other is saying and people jump on the worst possible interpretation of what is being proposed.
Debt needs to be paid down when times are good, not when we are struggling. It should have been paid down under Bush, when things were going well, but it wasn't, which leaves us with less flexibility now.
The problem with republicans is that they don't understand that when the economy is prospering, you pay back the debt that created that prosperity. And yes, that does reduce the amount of prosperity you get. If you fail to pay down the debt, that also reduces the prosperity, it just does so later, and harder.
It's the same counter-intuitive problem that makes the traditional stock market advice "buy low, sell high" so hard to follow. When a stock is doing well, people want to buy it. Too late, you missed it, and if you buy the stock that is doing well, you are buying high. When the stock crashes, people sell it, again, making the big mistake. Selling stock when it is low is the exact wrong thing to do, but it's the natural mistake. Same thing here. When the economy is in trouble, you borrow money to pump into it, when it is doing well, you pull that money back out an pay the debt. If it's done just right, you only get tiny fluctuations. But tiny fluctuatons are unsatisfying, so politicians take stronger actions, and the wrong ones, because just like any intuitive gambler, they crave the big emotional payoff.
I am fearful for the American economy.
I see glimpses of the pain many Americans have faced in my travels there in the past 3 years. My fear for the US economy is that the worst is yet to come as the deficit at a national level is out of control (and whether you like or hate Obama – I am sorely disappointed at the lack of leadership in the President's office on this matter).
Forget the Euro or anyone else in terms of relative comparison – focus on your own internal financial debt and settle it.
Come to grips with it and spending accordingly.
Please shut up already with the "lack of leadership" crap. Placing all the blame for this economic ruin – which has been in the works for years – on the current President demonstrates a total lack of knowledge at best, and displaced hatred at its worst. This is a worldwide issue created by a corrupt political-economic system. No one person is going to solve this. The GOP plays an integral role in not only the cause, but the corrective action as well. Until you – and everyone else – come to grips with this reality, you will forever wallow in nonproductive frustration.
Dr. B., Mr. Mike has expressed some of his personal concerns and even sympathy, which is mighty neighborly. I agree his disappointment is misplaced and that your analysis is quite realistic. But as a Doctor, you should exercise a little more professional ettiquette.
Austerity corrects nothing other than spending issues, and creates other problems. For the most part, spending issues are not what's wrong in many Countries; outsourcing entire industries, one after the other, year after year to low currency value slave labor nations is. Entire nations have been left with not enough jobs to cover the population, AND the ones that remain know they have a desperate situation to use to their advantage, making an employers market of dropping pay, increasing hours, making 1 person do 2.5 jobs, and so on. While it's initially good for the profits of any said company, it's the absolute worst thing you want for an economy, as it destroys disposable income for huge swaths of the population, thus ironically coming back to destroy many said businesses, due to lack of customers.
This hack Zakaria is doing everything that he can to land a position within the Obama Administration. The man oozes sleaze.
No one's forcing you to listen to him. If you don't like what he has to say then buzz off to your little trailer.
Two reasons why the US economy is doing better.
1) Cheap natural gas at nearly 1/4 the world price. (Can't be exported easily.)
2) Last year and for the near term we export more petroleum products than we import. (Oil is easy to export that's why the oil industry wants to build the Keystone pipeline not to lower our prices but keep them high since they can make more money overseas with our oil.)
This energy surplus has change the equation about sending jobs overseas. And as the pressure to lower wages increases the more jobs (at lower wages) have come back. (Considering the CEOs make 36 ties the average worker pay.)
America is again becoming the low cost place to manufacture – but at what social cost to the middle class?
This shows President Obama'a stimulus was a very good idea, probably a little too small but positive for US growth. The Europeans did exactly want Republicans and Tea Party wanted, cutting spending, but ironically, it leads to BIGGER deficits because people spend less. We would be in this same situation if the GOP had there way. And there rich buddies (Mitt Romney, Mr. 13% tax rate) get even richer. Where can I sign up, GOP?
There is nothing to back your fantasy, you obviously just accept whatever the state media tells you to think
Then where's your counter evidence? Do you have anything to refute his claim?
If you take the time to read a lot of the posts, there is sound logic and some evidence that while stimulus wasn't the answer, it has at the least not made things worse. There have been very very few comments on here with some sort of logic or evidence driven explanation for how cutting taxes and government spending will work.
If people have such a solid plan, why are they hiding it?
If the GOP has all the answers, why didn't they fix things when they had the chance?
The simple truth is that both parties are generally failing and/or are not willing to do what it takes to help the majority. There is too much influence from corporations and too much money being thrown around capitol hill for people to do the right thing.
Fortunately, we still have a say in things, and voting however people scoff has an effect. The American people can start by voting for turnover! Dem/Rep/Independent or whatever, if the current politician isn't actively working for the better of the whole then we need to start voting them out! I have no doubts that their are plenty of able and willing people to fill their seats.
Negtive growth, double down on a socialist agenda, raise taxes on success. NIce!!
I don't believe Europe thinks America is booming, they know that the US liberal media is not the place to get the facts. I have family and friends in Europe and they are very concerned with the Obama administration because they fear if we colapse financially we will drag them down as well
People..America is on the verge of an energy revolution that will transform the world faster than iPods took over walkmans. Regardless of politics, science is producing batteries that have the same energy density as gasoline and even newer technologies that will astound you in the coming years. This will produce jobs, reduce emmisions and allow us to concentrate on rebuilding our infastructure without breaking the bank. Think positive and embrace Yankee ingenuity!
I agree with you on the energy revolution part. We have many different sources currently being researched to be implemented in the near future. I don't agree with you on the battery aspect. We still have a long ways to go to create batteries that are even close to that of petro. I know people who are researching ultra capacitors to store energy, and even they don't match the energy density of gasoline and they are also very costly to manufacture at the present cost. We are getting there, but it's not going to happen quickly.
IBM, with the help of its supercomputer, just announced a proof-of-concept demo of a 'lithium-air' battery that 'breathes' oxygen. It's estimated to have a range of 500 miles, similar to a tank of gas. Should be commercialized by 2020. So we're not too far...
Also, the supercomputer that helped with this design will be 5x more powerful in 2020, and by 2045, Ray Kurzweil predicts that computers will be smarter than any human. Think we'll still be worried about oil then?
Any economy can grow when it's spending someone else's money at the rate we are. Lord help us when we can no longer sell our debt!
Or pay the interest on it should rates increase to let's say 10% ?
They still have the shack they found the notes in.
America IS booming--if you already have a few million in the investment accounts.
If you NEED to work every week for your groceries, gas, utilities, and rent–you're still screwed.
BTW, the ones with millions are paying significant portions of it to politicos that vote to support their keeping their millions AND their laborers cheap and desperate.
You hit the nail on the head! I have a Master's in International Security. Just graduated in December. I went to a top NE school and I've got a professional resume and plenty of internship experience. Unfortunately the jobs that are out there are for those with 20+ years of "specialized experience." so many are laid off right now that young people like myself are not even considered for positions, no matter how smart we may be. So, after sending out hundreds of resumes i can't even get an interview. My student loans are coming due and I can only find a temporary data entry job that pays $14 an hour. I have over 100,000 in debt from 6 years of schooling but no means to pay all of the payments. It's only a matter of time before massive defaults on student loans crash the economy.
Joe, I hate to break it to you. But internships do not make for a professional resume. The biggest mistake young people make is to take out massive loans to cover an expensive Master's degree program right after finishing an undergrad degree. Companies hiring students coming out of college prefer straight bachelors and not Masters graduates who have an over-inflated sense of their worth and value without any professional pedigree to back it up. Masters in the past has always been about professionals who have gained solid professional experience and now want to dive deeper into specific focused fields and can actually gain something out of it other than just rote book knowledge. But the societal mentality of more education is always better has brainwashed people into thinking it's worth it at all costs. Anyone who is readying to throw $50K into a graduate study program should be forced to do a thorough cost/benefit analysis. I recommend you leave your Masters off your resume, and I guarantee you will see responses start to trickle in.
Say one intelligent thing that would lead me to believe you.
We need to forget about cutting spending in the short term and focus on cutting it in the long term. We need to increase spending and inject more stimulus to help with job creation. We need to create tax incentives for companies that hire American workers and disincentives for those who outsource or hire foreigners. The businesses have run this country for long enough and it's time to grow a pair and put them in their place. We can focus on cutting the deficit when the economy turns around and stabilizes. The Dollar is still the world's reserve currency and most of our debt is publicly held. China holds a small amount but they know we'll eventually pay. It's time to do what's best for our country.
Joe...absolutely spot on. There is a time for everything. People enjoy driving on superhighways created when top tax rates we above 90%! Now we're debating whether to return to successful Clinton-era rates of 39%. No one is claiming this is the panacea...only one tool in the box. The rest is up to Yankee ingenuity, education and long-term thinking. Countries aren't corporations and that's why Romney is useless. He has no wisdom, charisma nor the verbal skills to navigate the rough waters of International relations. He would likely dig us into new holes we haven't even imagined yet.
You realize those tax rates were only during World War II right? So...most of it went to the war. Not highways. Or maybe Americans are happiest when at war? Obama certainly seems to be.
FareedIsTotallyRightCoughCough
You realize those tax rates were only during World War II right? So...most of it went to the war. Not highways. Or maybe Americans are happiest when at war? Obama certainly seems to be.
----------------------------------------------–
Top marginal tax rates of 91% held from 1950-1963 (92% in 1952/53 during the Korean conflict), dropping to 77% in 1964, then 70% from 1965-1980 except for a brief uptick in the later years of Vietnam to 75.25% in 1968, 77% in 1969 and 71.75% in 1970. In 1989 the rate was 69.13%, then 50% (1982-1986), 38.5% (1987), 28% (1988-89), 31% (1990-1992), 39.6% (1993-2000), 38.6% (2001-2002), and 35% since 2003. I've been around since 1952 and I do not recall people flinging themselvesout of windows over the 92% tax rate, even the 70% – never heard such whining as in the last few years of how AWFUL higher (margnal) tax rates would be, for themselves and – allegedly – for the economy. Back in the 90%+ days you could raise a big family, buy a house, take vacations and pay for college on one income, even if you were non-union. And the rich were still richer than everyone else. They were not deprived.
Floretta, I love you. Substance and grit, what more can you ask for
Part of what made that 90% tax bracket a working system was that the income subject to that tax rate was mighty high,once you adjust for inflation. That wasn't a McDonalds manager paying 90%, it was the CEO. Now, the manager of the Mcdonalds was paying a tax rate that had some bite as well, it wasn't, nothing, nothing, nothing, 90%. They system increased from the very bottom to the very top, with many steps along the way. We only have, what 4 tax rates today? At that time they had more like 20. It's funny that we view the old approach as complicated, and think that the simplicity of our system is a virtue, when the entire tax code is so complex that one person can't even read it in the span of a year.
austerity is the gop plan here, too. the red states that slashed their budgets have higher unemployment and will lag behind the blue states in recovery.
You have to get worse to get better. When you've been running budget deficits it ensures temporary stagnation. Yet eventually the economy improves in a free market scenario, whereas in a socialist environment the economy will never come close to its full potential and will run continual budget deficits on programs which reward laziness and stifle businesses and investment.
Should Europe print more money like the US and forstall the inevitable like we are here? Austerity now or austerity later, the second shoe will eventually fall in US, too.
So true!
It's not the EU/UK's austerity that is causing its slow growth, it IS a slow growth nanny state. Thus a downturn only magnifies this. Frankly the UK could amplify its austerity and it still wouldn't match the U.S.'s social policies, although Obama could also help slow the gap with more gov't spending, social programmes and higher taxes like Europe always has had.
If I lived in Europe, I wouldn't care to work either!
Then you would starve... but whatever, its your life.
Well, there's this thing. Not too many liberals have heard of it lately, so I don't blame you.
It's called working.
I am sorry but this guy is just wrong on the UK! Firstly, the UK government spending accounts for 50%+ of government spending with social security programs vastly more expensive in proportional terms then the USA. Secondly the UK economy spending 100s of billions of pounds into saving are banking sector which accounts 20% of GDP and also used about 275 billion in QE so don't just say that we didn't inject money because you just wrong!! Yes UK growth is at 0.8% but that is because are exporting sectors has been hit hard considering we export most of are good to the EURO ZONE (which is in a recession btw). Further more the UK government has decided to balance its books which is hard and painful but we are still growing and we have been on a social spending binge far too long further more we invest much more the most G20 countries before the recession of 2008 thus we had a largest budget deficit coming in and going out of that recession (the 2nd largest in the G20) and what has all this austerity done for the UK well: interest rates are at there lowest for 100+ years and are NOT rising!! Finally: the UK government have taken tought decsions that are being ducked by OBAMA because your government cant even pass a budget every year! (no budget for 3 years!! not passed and how many near shut downs of the US government?) and ps: UK tax revenues are UP not DOWN and uemployment is DOWN and inflation is on its way DOWN!!! you un-informed poor economist, try learnign you facts before you challenge the EU!
Now For the USA: a budget deficit 1 trillion plus for the last 3 years... growth below long term trend! Unemployment of 8% stuck there i might add! heavily over regulated industries! A social programme (social security, medicare, medicaid) that is out of control and need reform! Crime rate up, Education potions down! a government who cant decide on how to even budget the long term with a president avoiding the question of how to doing anything about it! the loss of a credit rating and along with US manufacturing sector unable to project proper forecast for the future! the US dollar falling and no more money left with demand from consumers only up slightly! ALL I CAN SAY IS THE USA IS NO PICNIC – your polcies have FAILED and you heading down the debt loaded road of the EU! so DONT TAKE THE HIGH GROUND when you cant afford to!!
The United States has economically outperformed the UK in almost every way during the past 3 years. Also, the individual states that chose spending cuts over spending expansion as a strategy have averaged higher overall unemployment, higher loss of private employment, and economic contraction.
Clearly you haven't been paying attention to Texas.
Grey – Texas has {a] largely poached jobs from other states and {b} has oil which, for now, is up and creating jobs. If we had the same in, say, Rhode Island, the governor of RI could be boasting the same. Texas also has low tax rates, and “right-to-work” laws, resulting in a budget deficit upwards of $27 BILLION for 2012/2013 and inTexas’s tying Mississippi as the states with the biggest percentage of workers paid at or below the minimum wage. Texas' unemployment rate, in spite of all that, is 7%, not all that far from the national average and way off the North Dakota level of 3% (also energy driven.)
To be honest, it shouldn't be that hard to outperform the UK considering the huge resource advantage we have. I don't have any hard numbers, but I will be looking into our relative performance over the last few years or so. My guess is that relative to our size, we aren't doing that great.
Lets emulate the texas approach. Hire all those unemployed people at poverty wages and below. That will work out great, I am sure. It has the satisfying quality to it that we can say "they are employed", and we can ignore the part where they can't afford a home, transportation, medicine, education, etc. They are employed and that's all that matters.
If the workforce can't afford to purchase goods and services, how does it benefit us for them to be working? Oh, and they can't afford to pay taxes. People have to actually have money in order to be able to spend it, on goods, services, or taxes.
a leaderless america is close to failing china is the place to be!
What??????????
He's saying move to China! 首頁的心在哪裡!
the consolidation of wealth is unprecidented. 93% of the income gain last year went to the top 1%. it was the 1% who caused the crash of '29 and the crash of '08. austerity is part of their plan to further consolidate wealth.
real austerity will come when the 1% has all the money.
This discussion is apparently directed to the rest of the country who still live in the Bush recession. I live in a low population plains state ajacent to a state with a growing oil field. The unemployment rate here is just over 4%. Manufacturers are crying for workers and the state has just signed a no-bid contract with Manpower to find workers willing to come here. (Lawsuit?... yes) To most of the nation it looks like the end of the earth but there are jobs here. The recession hit here but it wasn't as strong or as long lived. The state, counties, and cities cut expenditures to the bone and now find themselves with surpluses they are planning to spend on the richest among us. But there are jobs.
An economy based solely on natural resources is not good. Anything that would happen to that oil field would put your state into dire straits. One's economy must be diversified.
totally agree
And financing useless warfare putting taxpayers on the hook for 16 trillion bucks, then offshoring their jobs is a better way?? Better work harder on starting WWIII otherwise how is next 2 or 3 trillion going to be justified?
By offshoring some stage(s) of production abroad, U.S. firms can create more domestic employment in other stages of production. "The upstream blueprint designs and the vast downstream distribution and retail operations in the U.S. benefit from the possibility of offshoring some intermediate stages of such production as manufacturing and assembly operations."
Europe ran out of Other Peoples' Money. Unless major changes take place soon, the U.S.A. is going to be in the same place soon.
The USA is on the road to recovery, hamdullilah!
I love the USA so much that I brought all my my money over from the old country to invest.
Hurrah for America!
This is what I think:
If 99% of Americans had money to spend, they will spend it.
If a company needs customers to perpetuate its profits, you have to have money in the 99% of people possession to purchase the goods.
An unemployment check keeps a company's alive even if there are no Job's.
Lower taxes for a company that will always make money from a system doesn't deserve a tax cut- for strengthening our economy.
If a company hires more American worker, I feel they should get an incentive. If the middle class had a few hundred/thousand dollars a year, I'm sure they will purchase goods, or pay a bills from one of the Billion dollar industries.Therefore, a middle class tax cut would make sense.
It's not about cutting or raising taxes, its about building a nation where companies will want to hire US talent. The question becomes, how to do you foster new American talent: make education more affordable.
I think there are a lot of people who think that economy is detached from social issues, when in reality they are all correlated.
Obama 2012!
If George Bush had chosen to follow the economic policies of Bill Clinton, as suggested by the Republican David Walker, we would be in a much better position to compete with the Chinese. Instead, President Bush chose lower taxes and increase spending, and it was, obviously, a recipe for disaster. Furthermore, it also destroyed most Americans faith in the Republicans as America's party of fiscal responsibility. If Obama can find a way to balance the budget in his second term he will effectively eliminate the republicans as a viable option for most educated Americans.
An observation that most true Republicans would not disagree with on the basis of spending, not necessarily the "need" for more taxation ....
The Republicans (along with the rest of the country) that "fired" the Republican Congress as a majority in 2006 for their profligate spending are the same who are of Tea Party ilk and will enthusiastically support the downsizing of Barack Obama to the private sector in 2012.
So, you're saying that if Obama does what Republicans have been saying all along and balances the budget it will effectively eliminate the Republicans as a political force?
Wow.
I don't know whether to laugh or cry.
FareedIsTotallyRightCoughCough,
I think the idea of HOW we go about balancing that budget went way over your head dude.
Perfectly valid apart from ignoring the key fact that Europe as a whole (and Greece in particular) was in a much more dire financial situation than we were in and without drastic cutbacks, things would have been much, much worse.
RZ Theory on Economic Evolution and Science and Technology.
For some nations, the ratios of human output to machine output, and that of tangible products to service products has changed significantly over the last 50 to 60 years. And although some GDP figures for nations may even reflect these figures accurately, taxation by no means adequately compensates for the evolution that has taken place. In simple terms, the average working Joe whose income has not increased accordingly is stuck paying taxes, all the while corporations find creative ways to avoid paying their share of taxes and machines who do much of the actual work pay nothing.
So where does all this leave some of the once wealthiest and prosperous nations ? Apparently, for starters, with a human tax base that is already tapped out, a mountain of skyrocketing debt, and a government scrambling to somehow balance responsibilities and commitments going forward. Aside from a miracle, collapse, or WWIII, there is no quick fix for the situation, which is already forcing some nations to somehow bring their spending in line with revenues, being the only remaining viable option.
Science and technology can certainly make the world a better place. But it cannot readily make the world a bigger place, nor generate resources quickly enough to support an economic environment of sustained high speed expansion and growth.
Like Grissom on CSI said, "It is my experience that sometimes if you want to fast, go slow!". A lesson that the world needs to continuously keep in mind.
So basically you're saying our view on equity, ownership, and even government for that matter, are outdated. It's no wonder American is on the verge of a class war.
That, and probably incapable of adequately altering the course to avoid the "dark clouds" on the horizon. There are plenty of us who are sounding the alarms, but few real solutions being implemented. Sort of like New Orleans and hurricane Katrina. Or was that actually real ?
The only thing for real is the wind speed inside your empty brain.
Talking to Real Zonky Major
USA's motto is 'IN GOD WE TRUST'; that's why they have the largest economy, as well as the most powerful nation in the world. God blesses them.
Actually, we've been doing a lot of trusting in the Chinese lately. Just say'in.
Yeah but "In Mao We Trust" just doesn't have the same ring to it.
Austerity while raising taxes is plain stupid. You cut spending and taxes to increase the private sector. Second, public workers do not pay taxes. If you get your paycheck from the govt, then give some back to the govt you still are a cost. A privately employed person pays for the services rendered by the govt, but a govt. employee just gets a pay reduction because of taxes. It probably costs more to collect the taxes from public employees then they actually pay into revenue.
That's great logic there. By your reckoning, we should not collect taxes on government workers at all if it costs more to collect it than is actually received. And since, it's the same tax system everyone is under, therefore it must be true that it costs more to collect taxes from private workers than is taken in; so let's eliminate taxes on private workers as well to reduce "costs". So oh great and mighty wizard of Oz, where in the world is the government going to get the revenue to provide for all the myriad services and benefits that people refuse to give up or even cut back on. Taxes are a necessary evil if people want to retain any sense of government services and social safety net benefit programs. Since politicians and citizens refuse to cut back on services and programs rendered by the government, it only makes sense that government needs to increase taxes to pay for it all. You can't have your cake and eat it too when it comes to economics. Giving tax breaks does not spur long-term economic growth, it only adds to deficits and debts. The only only to balance a budget as any family knows is to either get a pay raise or cut back on spending, and if possible, BOTH. Why politicians and all their talking heads don't acknowledge this simple fact of life is the true tragedy in America.
"Second, public workers do not pay taxes. If you get your paycheck from the govt, then give some back to the govt you still are a cost."
This is a very sad line of thought, and completely ignores the idea that said government worker is providing some sort of service in exchange for $ (let's try to remember what the hell a dollar is supposed to represent, ok?) At worst the exchange is even, and that would be ignoring whatever long term good the worker is providing, such as crime prevention by police officers, educated children by teachers, etc, etc, etc, etc, etc, etc, etc, etc.
It is so insulting to see how little some people think of others who are just trying to contribute to the greater good. How the hell people think they have microwaves in their homes, or power even? Where do roads come from? ALLL of it comes from a community of people, without cooperation and the contribution of others we would all have a lot less fun and opportunity. I can only hope people start thinking about that when they continue to encourage policies that diminish our cooperative capabilities
EVERYBODY FILE BANKRUPTCY! The Banks will be sitting empty handed and we can reclaim our lives and countries. We will all start over. What you got.. is what you got. The banks will have to loan again its the only way they can make money. People will reinvest, especially the ones who squirled away money that wasn't in the banks. What do you have to lose? Unless your paper rich : )
Unfortunately, Scott, it doesn't quite work that way. Even if a bank goes under, your obligations to repay loans and mortgages are considered assets which are bought up by the highest bidder. But if everyone stopped paying taxes, now that would be different. Perhaps treasonous for organizing it, but probably very effective.
Another tome in the effort of Leftist Journalists with Ivy League credentials to convince Americans to accept as normal and reduce our expectations to the level of the rest of the world so that we will buy the lousy, clueless performance of President Barack Obama and give him a another opportunity to further send us closer 3rd world standards during a second presidential term.
This is the worst recovery since the "Great Depression"... One of every five able-bodied males (20%) is either officially on the unemployment rolls or has given up finding employment. The growth rate of 2% is lower that most if not almost all 20th century recessionary recoveries. We have a national debt which requires all men women and children, minors, adults and babies to come up with $67,000 per person to pay.
Mr. Zacharia's view of the world is still 3rd world A.O.K. from wherever he and his parents arrived from. Not coincidentally, as President Obama has ignored opportunity for financial prosperity and sought to spend us out of debt.
We can intuitively recognize that the third world model of living Obama experienced in Indonesia is in his view, a satisfactory lifestyle for citizens of the United States. This is especially so if we live piously along the ideal lines of the Green, collective and "Fair" society Obama, the "master mind" that he is, hopes to transform us to, whether we want it or not via trickle-up poverty and equalization.
There are signs the massive tax increases built into the 2013 schedule, part of it based on Obama Care, will have an even more chilling effect on the economy going forward. If this increase was going to be so good for the country and give Obama credentials toward his greatness, why then was it all postponed until after the 2012 elections? ... hmmm?
Grow up Allen. We're not any better than the rest of the world. HeII, the only reason we're solvent is because of the Chinese. Get over yourself and join the human race.
WE SHOULD ACKNOWLEDGE GOD IN OUR EURO CURRENCY TOO !! I'm jealous of the U$ dollar saying IN GOD WE TRUST
The Maltese Cross can be found on 1 and 2 Euro coins. Not that everyone was thrilled with it, but it carries enough of a Christian reference for some.
"But I was just in Europe, and they think America is booming." LOL, Europe is hardly one voice talking in an excited manner about the US economy. But of course that blanket statement sounds good to those wanting find a light for Obama within this economic mess.
Germany also had a stimulus *and* dialed backed its social welfare programs. The difference is its stimulus concentrated on the resource and industrial sector, and not nursing and teaching-sectors not hit nearly as hard as the resource/industrial sectors. Germany stimulus was also much smaller than the US'
Germany now has the dominant economy in Europe.
It's not one magic bullet approach that will fix the economy. You can't constantly inject money into it, but you can't make it so too many are taking out more than they are putting in, nor can you tie the market's hands. If you're going to inject money, inject it where the market was hit hardest, and invest for the future. While healthcare and teaching are important, they don't create nearly as much wealth nor do they meet the majority of consumer demands. Most products require wood to be chopped down, minerals to be mined, etc.
does anyone else think that the "French Finanace Minister of France" is a little redundant
Stamp out and eliminate redundancy.
If you think the "finance" minister is redundant, could you explain how?
FRENCH finance minister of FRANCE
Unless you think France has a German one also...wait, I guess that's Angela Merkel.
"Europe suffers from too much austerity"
Before that, they were suffering from too much spending.
Next week, they'll be suffering from too much or too little something else.
Why can't they get their act together?
History will judge which is better. Short term growth at the expense of tremendous debt to the next generation is going to destroy nations if not just immoral in the first place. The fact we're doing it "less bad" doesn't make it right. Our country became a superpower based on economic freedom and personal responsibility.
European countries were dumb enough to sign the Kyoto Treaty, which is more about the new world order than the environment since it allowed for unrestricted CO2 output by China and India. China now has the second highest number of billionaires to the U.S. and the number is growing fast while laborers still make a few Dollars a day in 60 hour work weeks. China is also the largest consumer of coal and coal use is continuing to grow quickly with a 9% increase in 2009.
The U.S. economy is far from safe even without signing the treaty. Government spending is far outpacing revenue and lobbyist created loopholes at the top and there is huge tax fraud at the bottom (earned income credit) reducing revenue further. To save the long-term U.S. economy, we need the tax changes Obama is proposing and the cuts that Ron Paul is proposing.
The reason why American economy is performing better than European is American has 'deferred' the hard choice to the future generation and the market doesn't have the stomach to call the bluff. Eventually, the deficit need to rein in with BOTH tax increase and spending cuts.
I plead with politicians from both parties...stop only think of the next election and work together. Don't waste this period of reprieve we're enjoying right now!
What do you mean "deferred"?
We pass the buck to the future generation and refused to fix it now...kicked it down a dark alley and hope it won't blow up on us.
In the last 100 years we have usually been much better off than Europe economically. Europeans have ALWAYS thought of us as being better off, even the few times we weren't. So, is this "discovery" supposed to make us feel better? This guy actually gets paid to write this childish stupidity?
Fareed Zakaria, you are an idiot. Austerity is the only solution to Europe's economic woes. It was runaway spending that got them into this mess. Do you think it's mere coincidence that the Eurozone countries suffering the worst are those who have a disproportionate debt to GDP problem?
Where did we instigate "runaway spending?"
Come on Zakaria! All of the growth in the US is being bought by the Federal Reserve! We're borrowing from our future! People need to start thinking, at some point you have to pay for all that borrowed prosperity. Just wait for interest rates to go back to 8%, we'll pray for the crisis of 2008 then.
Well Mr. Gloom and Doom, how do you know this?
16 trillion in debt and failing social programs.
That's it, that's all you got?
hehehe...
We have a continuing trade deficit all over the world and we are not booming. Illegal immigrants send an amount equal to our massive trade deficit out of the country every year, but Congress refuses to allow that to be added to our trade deficit figures because voters would get rid of them. We are going to pay the piper again and bigger if we continue to let illegal immigrants and global megacorporations bleed this country dry, No, we are NOT in a growth period.
Don'tcha just hate it when Paul Krugman proves to be right – AGAIN. You'd think after a decade or so of correct economic calls that economic planners (both US and European) might consider take his perspective more seriously. Unfortunately, for those who would prefer a "faith based economy" it doesn't matter what the numbers say, it doesn't matter what history has demonstrated, all that matters is what you want to believe and how loudly you can argue your point. It's unfortunate that the world's economy is chained to the puritanical belt-tighteners in America and Europe who would much rather punish perceived underachievers rather than find a real solution to the problem.
Dang, I can't write on Sunday mornings! Please ignore the horrible grammar and consider the argument, which I hope is clear...
How do you know his ideas have not been considered.
Sometimes, ideas look really good on paper but in real life, they stink.
What HAS happened in Europe and what the GoPers WANT to happen in the U S was obvious from the outset to anyone with a moderately functioning brain !
The Conservatives, the GoP are utterly and completely economically insane. . They have NOT YET discovered that one CAN NOT pay the butcher with ideology ! ! !
That is about the stupidest thing I have read in a long time. The GoPers, as you call them, think you pay for things with MONEY. And the Dems think you pay for things in YUAN.
Another CNN articicle with pro-Obama leanings. First we get an interview with Julia Louis Dreyfuss on why Romney is "not her guy" and then THIS. Keep it up SEE EN EN; you are rapidly becoming a partisan rag.
"The problem with Socialism is you eventually run out of other people's money" The Iron Lady got that right.
Europeans made their beds, now let them sleep in them!
No Fareed, Europe suffers from too much socialism. Socialism has destroyed commerce over there.
In France one out of four people work for the Govt. This means literally three people have to support
the one working for the Govt. We have too much Govt here, but it's one in seven.
The only way to fix something, anything, is for everyone to agree to the solution and for everyone to actively pursue the solution. Noone will cooperate on a solution shoved down their throat as you suggest. Hence, socialism.
You should study economics sometime. Because, you know, you clearly haven't.
You are saying that you know more than me?
Okay, then, explain yourself. I am going to read every word you write.
I don't have alot of complaints. We live in Texas, things are pretty damn good down here. My wife and I both have jobs, I'm in my 40's, she in her 30's, we have nine years until our house is paid off, all of our investments have taken a hit but were doing okay because we didn't buy a huge house and dont live above our means, which is the key people, don't try to live like a millionaire on a beer budget and you too can do okay. Our son has college money and retirement will be a reality, someday lol. I think owning a home/condo/townhouse is the key, pay it off as quick as you can, think of how much money you can save for retirement with no house payment, it's not rocket science, you dont need a 200 acre vineyard, just own property, save as much as you can, hopefully if we get a little from SS that will be nice, live simply, have a garden, can veggies and fruits, and you will make it, it's never too late to start, keep it simple!
David, to some, you are living the American dream. Appreciate and respect what you got. Be careful. Stay down to earth and make sure you can at least survive any shorter term disasters. Might want to consider quietly stowing away a little cash, couple of gold pieces, and small sidearm in case things ever get rough on a large scale.
I think economy is broken because the entry level jobs that do most of the actual work at the majority of companies pay minimum wages when the CEOs and other high level jobs that do nothing that could be considered actual work make millions. When executives make bad decisions that cost thousands of employees jobs the executives are allowed to resign before being fired and are allowed severance or golden parachutes. Why? Because they went to a university for 4 years? Have you ever watched undercover boss? The leaders of the companies have little in the way of actual work skills. Most have never held a physical job ever in their lives. I doesn't matterwtwhat
And, you don't think that's coming here? You'd better believe it. Especially if Obama is re-elected. He doesn't know the meaning of the words "cut" or "save." He only knows spend, spend, spend. Oh, wait...he knows "tax," "tax," "tax." And, the worst austerity won't come within his next 4-year reign of despotism, if he's re-elected. It will be up to the poor schmuck elected after him to deal with the hideous mess that's coming. Wonder if that guy will blame it all on Obama...as he should And, of course, Obama, making bazillions on the talk-circuit then, will just blame it on Bush. But, it will be King Liar's fault...he doesn't know what he's doing. Except in his goal of killing America...he sure knows what he's doing in THAT area.
great words, I wish everyone felt like this.
I know quite a few Europeans for business and hobby reasons and NONE of them think the US is booming. They think we solve our problems by borrowing and printing money. Apparently, a member of the EU can't just print more money nor do they have the clout to convince China to loan them more. ...... Let's go with the booming thing......
Europe has too much socialism baggage, just does not work. Sooner or later they run out of someone else's money.
don't worry, Obama's socialist policies will change us to Europe's bankrupt position soon.
Explain what you mean.
Otherwise, you are just spouting ca ca.
Have you made a comment yet which isn't just a question that shows your inability to understand basic English?
I would love to have a conversation with you; however, you have to say something first.
All I am reading is negative comment meant to create fear.
Say something with sustenance. Something that has facts. Something that is verifiable.
Not just ca ca.
Careful, Patrick is a "Major" now too! Major Moniker Jacking Doosh Bag!
What????
This is boiling down the Euro crisis to an idiotically stupid level just to try to prove that the "stimulus" worked and cutting budgets doesn't. None of the facts support this.
the only thing the stimulus did was give Obama a $100M re-election purse.
Prove it!
What is the nature of their debt?
Who are they indebted to?
Why not file bankruptcy?
Why don't those who turn the screws lighten up a bit?
What is the real political agenda of those who hold the notes?
Europe is older than we are and should know better, looks like they let the liberal movement ruin them.
WW1 they had empires in Europe. WW2 Communism and Socialism. Today they are paying the price for buying votes with ever more government freebies.
So what do you suggest, an oligarchy like in Iran?
It's not hard to search before/after performance metrics for each administration to know that our economy is in the tank and thanks to skyrocketing debt, the value of the US dollar is shrinking.
I suppose if you are Spain, Italy or Greece we must look ~good...
Understanding that oil is traded in US dollars, the price of gas today bears witness to what you said.
Seen the price of eggs, milk, meat, grains lately?
I can APPEAR to be doing well by buying lots of stuff, but when my credit card statement catches up to me I will have a harsh awakening. That is the position most of Europe is in because of their socialist spending, 30 hour work weeks, early retirement, long vacations, social programs, universal healthcare, education, etc. If spending money was the key to a healthy economy they would have been outperforming the US for the last 40 years.
Simple. Just tax the rich! Then everything will be peaches and free for everyone. Or maybe even bring down Capitalism. Everyone will be stuck at lower middle class, but hay, its fair.
Thank you Zakaria. That makes me feel heaps better.
Seeing as he is a European style Socialist, I am sure he believes that 2% growth is reason enough to re-elect Obama. Happy Days Are Here Again!
Yay! Mediocrity!
Change we all can agree with.
The good thing about our debt to China is that they will probably never collect it. If our economy is destoryed, they can say goodbye to their economy as well. Since they base their currency 1-1 versus ours. They cheat and don't let their currency float in the world market like all of the capitalistic nations.
European's must be watching a different Fox News Network...
What? No actually when i was in Europe all they seemed to play was CNN International.
Because Europe is super conservative right! Yeah! Let's all make inane comments which blame Europe's socialist problems on an excess of conservatism!
Silly liberal. Now be quiet, Zakaria, the adults are talking.
ZAKARIA YOU IDIOT! SOCIALISM AND SPENDING IS WHAT PUT EUROPE IN SUCH TERRIBLE SHAPE.
AND YOU WANT THIS FOR AMERICA?
GO TO HELL.
Our debt is more than all the EU countries combined! That includes Italy, Greece, Ireland and the others.
Do you remember when Zakaria wrote a story on how the US should do away with our form of government and go to a Parliamentarian system? I am glad i am not the only one to peg him for what he is. But liberals get tingles up their leg for anyone with a European accent.
Using his logic, since China has SLOWED DOWN to 7% I guess we should all be communist.
I still don't understand why the value of the Euro doesn't drop if their economy is in such bad shape. All that has to happen for the value of the dollar to drop is for someone to just 'mention' anything about any sort of scandal, money loss, stock market drop etc. How do they keep their value so high?
They have a common currency. So its easy to "adjust" the worth of their euro. If Germany were to go bust the whole place would fall.
. Zakaria is already in hell, he lives in a free capitalist country which he thinks should be a controlled communist one. Must be torture to use his free speech and get paid so much money to fight to change the country to a system without free speech where he wouldn't get paid much money, or would be imprisoned for speaking his mind.
His political buddies keep trying to pass the Fairness Doctrine.
World War I and World War II and all the other help the United States has done for Europe, the United States has problems of its own now, but out Europe leave us alone.
We pay the most in NATO and the UN. We have in the past 3 years sent billions to the IMF. They like our money, hate us as a society.
Europe helped the US before US came to help Europe REMEMBER !!! Moron !
The fact is that America is in a fundamentally different economic position because it is the worlds superpower. This means America can borrow far more money and print far more money without negative repercussions. How? largely because most dollars are outside the US. This means that when America prints dollars, the whole world pays. The other economic powers who profit from the current global power structure will not disrupt this as they realize the benefit of having America be the stabilizing unrivaled superpower, and the horrific consequences of the ensuing power vacuum if this ceased to be.
You must be Gen-X or older. We used to have Pride. Now we have "spread the wealth" and "tax the so called rich".
Indeed I am. I am also a veteran. Sadly, it has been part of the agenda of the left to demonize the military when in fact it is the fundamental pillar of America's prosperity. No nation is going to allow us to print vast sums of money at their expense if we decide to spend all our resources on ultra robust welfare programs instead of maintaining global security.
if you look at american tax history, the rich were taxed a whopping 94% in 1945, having steadily increased from 77% in 1918 to help fund WW1 fighting around the time of the Great Depression. http://en.wikipedia.org/wiki/File:Chart_1.png I think somewhere around a 20-25% flat tax rate should go to everyone, much higher than that is a bit overboard but I don't think Warren Buffett should pay less percentage than his secretary.
my reply was directed to william.
Guest – You must be able to understand that 10% of $1B is a heck of a lot more than 10% of $25,000.
Okay, I give, why are they "so called rich?"
....WAS the superpower.....not anymore !!
The spring chill some feared would once again sap the US's fragile economic recovery appears to have held off as American firms have reported better-than-expected first-quarter earnings.
The earnings season started in earnest this week with Alcoa, Google and JP Morgan reporting better-than-expected results. The figures will be a boost to president Barack Obama who has put the economic recovery at the centre of his reelection campaign.
Europe's continuing woes were still a worry in the US, although far less pressing at the moment than they had been. Europe remains is crisis even as the US appears to be pulling out of its historic slump. Next week the International Monetary Fund meets in Washington. IMF managing director Christine Lagarde struck a cautiously optimistic note this week, saying that the IMF might not need as large a boost in financial resources as first thought to address Europe's debt crisis.
Where is the world economy heading?
The IMF, at its spring conference in Washington, says the prospect is for stronger growth as long as the Europeans, Americans and Chinese restrain their urge to make a complete hash of their domestic recoveries.
Optimists make the point that most countries have stabilised and can provide a platform for private sector growth – if not this month then in the not-too-distant future.
There are exceptions in Latin America, parts of Europe and Africa, where some countries have hit the buffers, but no enough to knock the momentum fostered by the US and supported by the Chinese.
In the USA we plan to print more paper for you to work for next week. Please work harder.
We all have to work harder.
People should also be given a fair chance in several spheres related to health care, education, social services, economic opportunities, better living standards and also make provision for the generations to come.
To promote the above theory into a phenomenon, the US President introduced the Millennium Challenge Account or the MCA. As per the MCA program, any country, which decides to be self sufficient is given a reward. In the year 2004 to 2005, approximately USD$2.5 billion was the amount of the MCA fund. The program envisages that countries ought to run the nation in a just manner, raise voice against deceitful practices, make the market more liberalized, eliminate any barrier, which hinders entrepreneurship.
And by "a fair chance" you mean the people that work should pay for the people that don't. Also, we should stifle future economic growth in the name of your bottom-heavy "fairness" today.
People that work should pay for the people who are unable to pay.
When people are employed again, they too will collaborate in the financial, economic, health, education... of their peers.
I don't get it.... isn't 2-3% growth considered healthy?
Yes, you do get it!
2-3% barely keeps our head above water. It is stagnant growth at best we are in need of 7-8% growth with government cuts to get us through this muck..
Highly unrealistic in today's economy.
The is BETTER as parts of the Euro Zone? This part of the Euro Zone must be Austria.
All what I see here in the US is "MADE IN CHINA" and alot of un-employed people. All what I see from open jobs are hundreds and hundreds of applicants for 1 open position. I do not call this growth.
Nonfarm payroll employment rose by 120,000 in March, and the unemployment rate was little changed at 8.2 percent, the U.S. Bureau of Labor Statistics reported today. Employment rose in manufacturing, food services and drinking places, and health care, but was down in retail trade.
I have always said and known that austerity cannot be a solution to the current problem.
President obama got the right solution.
Government can increase expenditure, so long as it can maintain people at their jobs, stimulate demands and growth of the economy. It is better than removing people from work, shrinking demand and hence stagnation of the economy.
Those American companies that got bailout monies managed to pay back, maintained people at work and hence contributed to the current growth. If the whole world made a cordinated intervention in their economies, by now America would be growing by almost 4%. The problem is America being an open economy, lost some of the monies to Europe and China. This was through forigen counties winning contracts in America.
"Why Europe thinks America is booming..."
Because it's a continent filled with stupid people.
as a child my oldest brother recieved a shiny new bike,my second oldest brother recieved a boom box radio,i recieved a dog and my little brother recieved a fire truck.all of my brothers were jealous of each others belongings and started fighting.my second oldest brother accused dad of being communist so he took everything apart and gave the oldest two speakers and a fire truck seat,my second oldest got two bicycle wheels and a fire truck ladder and the youngest bicycle handle bars and an antennae.i asked my dad what sense that made.he replied that life isnt fair and that is how communism(very similar to socialism)works.he then asked me if i had any complaints.i told mom that dad was going to take the dog apart.she replied that she wasnt going to let him do that but sharing would be a good idea.WHEN ARE YOU LIBERALS GOING TO UNDERSTAND SOCIALISM(fairness doctrine,redistribution of wealth,welfare and taxing the rich) WILL NEVER WORK? OR DO I NEED TO TAKE YOUR DOG APART?
People often confuse "socialism" with the concept of "communism." While the two ideologies share much in common - in in fact communism encompasses socialism - the primary difference between the two is that "socialism" applies to economic systems, whereas "communism" applies to both economic and political systems.
Another difference between socialism and communism is that communists directly oppose the concept of capitalism, an economic system in which production is controlled by private interests. Socialists, on the other hand, believe socialism can exist within a capitalist society.
Democratic socialists believe that the individuality of each human being can only be developed in a society embodying
the values of liberty, equality, and solidarity. These beliefs do not entail a crude conception of equality that conceives of
human beings as equal in all respects. Rather, if human beings are to develop their distinct capacities they must be accorded equal respect and opportunities denied them by the inequalities of capitalist society, in which the life opportunities of a child born in the inner city are starkly less than that of a child born in an affluent suburb. A democratic community committed to the equal moral worth of each citizen will socially provide the cultural and economic necessities—food, housing, quality education, healthcare, childcare—for the development of human individuality.
Achieving this diversity and opportunity necessitates a fundamental restructuring of our socio-economic order. While the
freedoms that exist under democratic capitalism are gains of popular struggle to be cherished, democratic socialists argue that the values of liberal democracy can only be fulfilled when the economy as well as the government is democratically controlled.
The world is in this situation due to Governmental corruption and greed. Until we find an honest man, we're all screwed...
What "governmental corruption and greed?"
If you are not able to name at least 4 or 6, then you are pulling statements out of your hiney?
I am from Europe, from Germany. I usually spend 6 months in my home country, and another 6 months in the US. In Germany NOBODY thinks that the US is blooming. They believe that the Americans lost their sense of reality and are going in wrong direction. On the one hand the US is boasting that it has the biggest military in the world and is capable to punish anyone he wants.On the other hand the US government has no interest in keeping its cities clean, roads in perfect condition, improve public transportation, and make the health care available to its citizens. Believe me, every time when I come back from Germany to the US, I always fill like I just left a capital city for a province town.
Agreed. My German in-laws all feel that the reckless children (America, Greece, Italy) brought them down. I can't help but think that also. Germans still actually make stuff, manage to live within their means AND provide a safety net for those unable to care for themselves. America is unwilling or unable to do any of these things.
So you are building your entire economic thesis on how your "German in-laws feel?"
Okay, then.
elshad, this is what happens when the MIC and oligarchs hijack a government. And pay no attention to "Major" Patrick.
So Rosie Zeek
I went back and found a "Major" and, by your juvenile behaviour, I assume that this was one of your names.
So, now, you are all upset that I, also, used that common name to the point that your nickers are in a knot.
hehehe...
In the past 3 weeks, I have been harassed by some dork who has posted inane statements using my name.
Did you do that?
Not a chance. It's way below me. So how do I know your not actually the dork? And if you answer with a hajibi, Abdul, hehehehe or whatever, we're back to square one.
When I posted with 3 names including "Major", I posted using my way of speaking so that you would know that is was me.
Nice try. You're busted.
I am definiltly on the hunt for my harasser and you are definitly not off the hook-no matter how much you profess that it is "way below" you.
The German economy will grow at least 2% this year. With a budget deficit of about 1%. The health insurance and other social services have posted a 10 billion surplus this year by the Way. There is a debate going on about how to distribute the surplus, compare that to the US.
I wish these people would stop using phony paper IOUs to calculate growth in an economy. I understand why people believed this is the past just as I did. But I hard does one need to be slapped square in the face by proof it failed and will continue to fail.
European accidentally spread socialism in USA. No way you get back once everything is eaten up.
And if the tea idiots had had their way America would be following in Europe's misguided direction. Thank goodness the tea people have faded into the background. We can only hope they stay there and that the GOP doesn't get the power to enact their inane economy killing policies.
Both the US and Europe are wrong. Deficit stimulous spending is wrong, and extreme austerity is wrong. We don't need tax increases, and we don't need to cut spending drastically (or expand spending). We need to throw out the existing tax code and start over. Take the power away from lobbying groups by outlawing deductions and exemptions, etc. 10% income tax flat, 10% corporate income tax, 5% federal sales tax, 5% long term capital gains, 10% long term capital gains. Huge boost to both the economy and the federal coffers. But it makes too much sense, so it won't happen until we spend ourselves (or austere ourselves) into the great depression II. Then, maybe, sense will prevail.
correction: 10% SHORT term capital gains
True. Whoever made money is not going to contribute a penny to rebuild economy. Luckily people with money do have their politicians, judges whether in U.S or anywhere in the world.
EU can not do things like QE1 QE2 QEX because euro is not dollar. That's the key problem.
And Europeans are working really hard to make euro to be the next dollar. Once that is true, US economy will shrink like -10% every year.
Wrong!!! the Euro will break within 5 years, stated this week by the IMF chief himself, China is grooming their Yuan to become the new world currency and that will happen only if the dollar goes under by getting hit by hyperinflation. So our true enemy is hyperinflation and is the reason why is being strictly watch. Eurozone is over...too many countries to bailout.
"...cutting spending and raising taxes to reduce deficits are finding themselves in a downward spiral: cutting spending means laying off people, which means less demand for good and services, which means the economy shrinks..."
That's true only if government is such a huge part of the economy that the layoffs contribute significantly to unemployment, which is a pretty brain-dead position for countries to put themselves in. And, of course, raising taxes removes more money from the economy than it recycles back into it, so that's a pretty brain-dead thing to do too.
Unfortunately since our factories went bye bye overseas the government has picked up a lot of the slack and employed many, not the best situation but is a fact, therefore if the government starts to lay off at this time, the economy will go into a spiral dive that will affect the rest of the economies in the world. when the Government bought shares of GM and Chrysler everyone cried wolf, look now, they survived and paid back those shares with interest.
The Iranian workers' situation has never been so bad. In a textile plant in the city of Mazandaran, for instance, workers have not been paid for 16 months. This plant, the largest in the country, until recently employed about 7,000 people. But layoffs have since reduced the number to 700, and even they are forced to wait months for their salaries.
The same is true in the city of Qazvin, where some workers have not received wages for a year. And an employee of a pipe factory in the city of Ahvaz told Iran's Radio Zamaneh that he hasn't received a salary in two years.
Though labor unions are negotiating with the government and occasionally even hold demonstrations, to date, workers have not gotten anything beyond a verbal commitment to deal with the late payments. Meanwhile, in addition to causing rising unemployment, sanctions have sent the prices of consumer goods soaring by 30 to 70 percent, due to the difficulties of importing.
dont worry Europe, we are adopting the same socialist ideals that lead you down your path, so we will be following in the footsteps of your demise.
The decision by the Gulf states, and especially the United Arab Emirates, to stop trading in Iranian rials deals a harsh blow to the Iranian economy. Thousands of Iranian companies opened branches in Dubai in recent years, and tens of thousands of Iranian businessmen use the country to import and export non-oil merchandise. Now, they will have to come up with another way to run their businesses.
Iranian businessmen have a double problem: Not only are the banks refusing to accept Iranian rials, but Iranians are finding it difficult to pay for goods in other currencies, because their government imposes strict restrictions on taking foreign currency out of the country.
So Zak ole buddy if what you say is true, why do you run with the crowd that wants to implement more and more social programs ?
Iran's economy feeling the heat of sanctions
The Gulf states' decision to halt trade in Iranian rials will impose more hardship on Iran's middle and lower classes. Whether it will alter the regime's nuclear policy is a different issue.
the only country going through a boom is Australia.
Governments need to understand that if you lay off people you lose your tax base and demand for goods and services, mortgages don't get paid, housing market drops and more people uses government aid which increases deficits. So, injection of funds is an excellent tool and it has been working over here, we still have jobs and unemployment has been slowly dropping. Of course that is until conservative policies comes in and start to shut down jobs in the government and a truck load of people goes into the streets. That is precisely what is happening in Europe. Too deep austerity measures in times of recession is a bad idea since they will reduce growth and the tax base. All i know is 3 to 4 years ago in Illinois we were about to lose our jobs and houses, today we have three more people employed in our family in great and steady middle class jobs, and that is happening in many other places.
Every time Europe puts in severe austerity measures, it starts another World War. Bread sold and peasants starve in Germany? World War 1. Austerity all around? World War 2. After WWII, America bailed out Europe under the "Marshall Plan," and they thrived for awhile. Now America does not have the means to do that, because we are hurting ourselves, worse than they (we have had austerity for many years). So they might restart the ancient European habit of starting wars against each other, an historical fact.
Non-rich Americans have suffered from austerity for years. Our medical care COSTS money; it is hard to get, and has high deductibles, co-pays, and it goes away if you are too sick to work (to be replaced after a year of no medical care with Medicare or Medicaid; good luck living that long if you have cancer). We have to PAY for higher education for our children, or they have to pay high student loans for their entire adult lives. Our elderly are only partially cared for; if they have dementia we must PAY for skilled nursing care, or else hope that (again) Medicaid kicks in. If we have ideal jobs, our vacations are much SHORTER than Europeans' vacations, and we do not have paid leave for child-bearing. Our salaries are no higher (adjusted for inflation) than they were under Reagan, in fact, many have had wages cut in half for the same or a much higher-skilled job than they had 40 years ago. In short, what they are experiencing NOW is just about the same that we have been experiencing for many many years. We are glad to get any job that meets some of those high expenses, so the Europeans think we are doing fine, which we are not. On top of this, women in America are now being made criminals if they have miscarriages; do that in Europe and it would start civil wars. If they came here, I think they would change their tune very fast.
Is this dude for real? Countries lose money by firing employees because those people are no longer paying taxes? Do the math in your head Fareed, use round numbers to keep it simple.
Remember, the US cooks the numbers on inflation (CPI). The CPI includes lots of subjective "hedonic adjustments" to understate inflation. Greenspan started these adjustments and admitted the point was to reduce social security payments. Michael Boskin, who implemented the current formula, wrote an article "Don't Like the Numbers? Change 'Em: If a CEO issued the kind of distorted figures put out by politicians and scientists, he'd wind up in prison" explaining how the inflation figures are ridiculously understated.
If you use the REAL inflation formulas, like they do at shadowstats, you'll see inflation is actually really high. Understating is WONDERFUL for politicians. Say we REALLY have 6% inflation. But after all the hedonic adjustments, the government declares inflation was only 3%. Then, voila, we had 3% growth! Really, it's just inflation. But to the dimwits who write articles like this, and who believe all the propaganda the government feeds, they actually believe we had 3% growth, and are doing so much better than Europe. Stop to think.... If inflation were low, why is the dollar losing all it's value against other world currencies? Why are health care and education costs increasing 5x faster than inflation? Why are housing and groceries increasing much faster than inflation? If you actually just stop and think, you'd realize the US economy isn't growing at all. This "growth" really is just unreported inflation. Now it makes sense why we have high unemployment, a plummeting currency, skyrocketing costs, and yet, according to our government, we're doing so much better than Europe.
If you want to see a real economic policy that works, look at Switzerland. They don't play inflation games. Their inflation is near zero. In fact, they kept the gold-standard the whole 20th century. Real estate prices and other costs are rock solid. No roller coaster booms and busts. They have real, steady growth of 1-2%/year. Very low unemployment. Zero poverty. Very high standard of living. High personal incomes (higher than the US). Excellent health care for everyone. Excellent education for everyone–completely free. Never a pothole in the roads. Excellent infrastructure and public services. And what's their strategy? Low taxes (approx 4-6% federal income tax), limited central government, pro business, libertarian/Ron Paul-style politics.
.. not to mention they don't have military bases all over the world and they don't fund perpetual wars to benefit their banks and military industrial complex.
The underlying reason for the total collapse in its economy is Iran's obsession with uranium 235 that the West believes it is secretly enriching for a nuclear bomb.
The price Tehran pays for continuing that programme will spike sharply too, after European Union foreign ministers met in Brussels to approve a ban on importing Iranian crude oil – a stiff blow to a regime whose vast energy wealth has long kept it afloat.
The new sanctions come just three weeks after the US President, Barack Obama, signed a law that effectively allows Washington to ban any country that buys Iranian oil from access to the US financial system.
When will ever learn to fix our financial system? We do not need to cut spending, we do not need economic growth, we don't need more jobs. Until we learn that what we need is consensus and vision, we will continue to sabotage ourselves and our potential. Money is in ours minds. There is no shortage of money. We allow our economic and financial system to prevent us from doing what needs to be done. Until we dare to think differently and understand what money and spending really are, we will continue see crisis after crisis for the remained of human civilization. You have to ask is this really the best we can do?
Funny how he never tells you who is going to pay back all this spending of money we do not have. I guess when a country hits the ole debt wall, they just tell the peeps who gave them the money that they will have to take a hair cut. So basically they steal the money lent to them.
Faced with piles of riyal bank notes that grow bigger but more worthless every day amid the panic over Iran's mounting nuclear crisis, Iranians are turning to the one currency that has weathered every twist in Iran's turbulent history – the sekkeh, or gold sovereigns first minted in ancient Persia in 500 BC.
"The riyal is falling so fast that it's impossible to do business in it," Mr Fathi, 35, a stationery merchant, told The Sunday Telegraph last week.
It's going to get much worse, and it's coming to the US, too. Hold on to your hats folks, the government, the Fed, and Wall Street have been lying. The S is gonna Hit The Fan soon..
We are shaking in our boots.
Are you shaking in your sandals?
More scare tactics from doomsdayers. Get in your bomb shelter, pantywaist.
Israel has no such problems....
What stupid Americans seem not to understand, is that Jews are chosen people.
We will reap the rewards of our faithful service to Yahweh.
The goyim of this world should be happy to fight over the scraps that we Jews throw from table.
Israel will reign supreme over earth, and anybody challenging that assertion will be conquered, with the help of US military.
You people may not like us Jews, but you WILL learn to fear us.
If a few of you must die to save a few of us....that's a bargain I can live with. Your own nations agree with me on this.
Your sacrafices are necessary to ensure the survival of the only democracy in the middle east.
So you must know that we know that you are not Jewish–just a piece of islamist ca ca trying to raise more ca ca.
hehehehe...
The US is following, poorly, Keynesian economic policy, which is why it is posting growth. Europe is pursuing the opposite, whcih is why it is continuing to contract. This demonstrates that Obama is right, and that the Germans and republicans are wrong, but that is no surprise. It is simply the match up of science versus myth.
of course ... when you fail to include the US debt in your math figures, like this article and the Obama administration ... it's always going to look better than it is ... unfortunately for the US ... math does not lie, even when you ignore them ... the numbers always eventually catch up.
Iran's economy is marked by an inefficient state sector, reliance on the oil sector, which provides the majority of government revenues, and statist policies, which create major distortions throughout the system. Private sector activity is typically limited to small-scale workshops, farming, and services. Price controls, subsidies, and other rigidities weigh down the economy, undermining the potential for private-sector-led growth. Significant informal market activity flourishes and corruption is widespread.
Of course Europe paints a grimmer picture of itself.
It's not that the US is doing much better. The Europeans are just less concerned with painting a rosy picture with constant propaganda.
Well made points, if you can get past all the grammatical mistakes. Sorry, I have nothing but the utmost respect for the reporter on this story, but if I performed like this in my business, I wouldn't have one. Writing is indeed an art form, and should be respected as such, and the Editor on this story should be scalded.
The article fails to point out the rapidly growing deficit the US government is generating ... the 2-3% groth in the general economy, does not take into account the multi-billion dollars of government debt in the US.
The Dutch government is teetering on the brink of collapse following the failure of talks to decide whether to adopt austerity measures to cap the country’s budget deficit.
Economic data and technical data coming out of Spain is telling us point blank that disaster is looming and will trigger the dominos to fall across Europe.
The perfect storm of an economic collapse fueled by an all out housing and mortgage crash, a sovereign debt crisis, and a run on the over-leveraged unregulated Spanish banks is hammering Spain right now.
When Greece finally defaulted, the media downplayed the ramifications and claimed the debt contagion wouldn’t spread.
They lied and there is a reason that Spain has banned all cash transactions over 2,500 Euros and the IMF is raising the alarm that the debt crisis will persist throughout all of 2012.
There is a reason that the IMF is warning of a collapse of the Euro and full-blown financial panic.
Plain and simple, whether the media will admit it or not, Spain is next.
Brace yourself because doomsday is rapidly approaching for the entire global economic system.
Spain is About to Enter a Full-Scale Collapse.
A few facts about Spain:
• Total Spanish banking loans are equal to 170% of Spanish GDP.
• Troubled loans at Spanish Banks just hit an 18-year high.
• Spanish Banks are drawing a record €316.3 billion from the ECB
(up from €169.2 billion in February).
Things have gotten so bad that Spanish citizens are pulling their money out of Spain en masse: €65 billion left the Spanish banking system in March 2012 alone
Where did you find these figures?
We, too, would like to see these figures.
Please share.
Austerity is ridiculous and only hurts economies. If you are economically right wing (like myself, you reduce taxes and limit public services. If you are a leftie, you increase taxes and increase public services. I greatly prefer the former, but both have their benefits.
What you do NOT do, is increase taxes and reduce public services (both significantly, in some cases). Growth, trust and morale become non existent under such severe austerity. Trust, both in the government and in the economy, is necessary for an economy to prosper. This is not possible in many European countries. Greece, Spain, Ireland and probably Europe as a whole, is on the brink of an economic collapse.
Austerity is supposed to hurt, that's the idea. But, that worthless euro still stays at $1.31
the "worthless" depends on who you are. For a Greek person trying to sell vacations to Americans it's a bad thing to have the euro at that level.For a US car manufacturer trying to sell cars in Europe it's a good thing.Thats what the US is trying to do debase it's currency so it can boost it's exports.The trouble is all countries in the world are following the us down to the bottom so you get huge inflation everywhere.Inflation in the US is running at 8-12% although it's reported as something like 3% in the Eurozone inflation is around 5-6% reported as 2.7%.It's a race to the bottom.If you want to really value $ or € don't look at them against each other but look at them against things like oil or gold or real things.
They are following us, and we are following china. China started the economic conflict, and devalued currency was part of their strategy. We have to compete with them on that strategy, and if the US and china are devaluing currency, everyone else has to as well.
It doesn't take a genius to figure out austerity hurts.It always hurts when you go from getting lots of free money to no money and you have to go out and earn it.That hurts but it's short term.You go through withdrawal which is painful and then you recover.The period and how much pain one suffers depends on how addicted one has become on credit.You have to look at it as a crack addiction.Growth will come once the system the body has been cleansed.The wages have adjusted etc. etc to permit growth to occur.
Why should I have to pay 50% tax on my hard earned money? And why should I have to pay significant amounts of VAT and consumption taxes AS WELL AS paying 50% income tax? That is not just unfair. That is theft.
Slow pace of the economic recovery? From 2009 to 2011 the number of people who have to use food stamps has exploded from 33 million to 46, and you call this a recovery? Well, I guess JPMorgan Chase would
The current situations in the Middle East have made clear that human rights abuses are not all made equal. For the past week the Syrian government has shelled and burned Homs, while denying the Red Cross access to the victims. Recently, the fighting also claimed the lives of two prominent journalists, American Marie Colvin, and French photographer Remi Ochlik.
But while the ongoing events in Syria are horrendous, they are not unique to the region, nor are they the worst of a government’s genocide of its citizens. According to New York Times journalist Nick Kristof, the number that have been killed in Syria is “is within the margin of error of estimates of the numbers of people killed by President Omar Hassan al-Bashir of Sudan.”
“This is a mass atrocity that has attracted little attention: a government starving its people, massacring them, raping them, and bombing them — all in hopes of crushing a rebel movement,” Kristof reports.
What does that have to do with European and US economic recovery?
Anyway, when Al Assad goes, he'll just be replaced by a bunch of crazy Mussies. In the Middle East and North Africa you get two choices: A crazy but relatively secular dictator or a crazy, fanatical theocracy.
What's a mussy?
Whats this American obsession with socialism ?...I am European and I have been to your great country many times and I have always been impressed by the energy. friendliness and enthusiasm that seems to abound in the USA..Having visited forty two states I am also aware of the limitations that American capitalism presents for the tens of millions of American residents that cannot compete in this system. Living in a democracy we have a covenant to share some of our resources with those of our citizens that are less fortunate or capable... In Europe those resources provide a safety net that Americans may regard as too generous or not Laisses faire enough.. Conversely, European visitors are often appalled at the lack of medical care that many Americans suffer from in order to boost the profit margins of modern day robber barons in the form of insurance companies and HMOs usually of the Republican variety it would seem...Perhaps we can learn something from each others systems as they both seem to function well on many levels despite the high debt levels on BOTH side of the Atlantic
Europe surely has no future as long as they continue importing boat loads of unadapatble immigrants.
I say this being an immigrant myself, b'coz there is a clear disticntion between highly educated people who even as they bring in other cultures readily ADAPT to local European & American societies, and those from Islamic countries many of whom largely subsist on WELFARE and bring in value systems that are diamterically opposite to what Europeans & Americans believe in, and more importantly NEVER integrate.
No wonder with a steady decline in Europe's local population and an explosion of these minority kids, Europe is FOR EVER losing its ability to stand on its own two feet!
Zakaria is NOT an economist or a businessman and has no clue what he is talking about.
Getting costs under control is one thing. Austerity programs are quite another. My background has been in managing and owning high tech businesses, now retired. That industry requires your development group must have products in design intended to obsolete the products they are just releasing to the market. The popular slogan is "You can't save your way to success." Control costs but success comes through investment.
You are absolutely right.
A company is as rich as its assets, even if that means humanitarian assets (intellectual).
The greatest threat that Europe is facing is a depletion of that asset base due to hrdes of anadaptable, unqualified, welfare dependent immigrants from islamic countries who have NOT only brought in their religious dogmas, but also a POLITICAL IDEOLOGY that's totally alien to Europe.
So Europe is standing on a FLIMSY foundation and can never survive UNLESS they adapt bold measures to stem this tide, and deport all those who have entered illegally, and STOP their self defeatist ASYLUM regime.
Without these EUROPE IS DOOMED........for ever!
European socialism isn't as socialist as you might think
by Philip Nord
Philip Nord is Rosengarten Professor of Modern and Contemporary History at Princeton University. His latest book is France's New Deal: From the Thirties to the Postwar Era (Princeton, 2010).
Our economy is growing by 2% – 3% because the government is over-spending its budget so severely that national debt - already at 100% of GDP - is growing by 15% per year. That sounds like a pretty bad deal.
Too much austerity?! Only a hard lefty who loves Obama's spend at all costs, redistribute the wealth philosophy would even dream up such nonsense. Obama has spent more than all prior administrations combined. Give me a break!
Well , my comment vanished-I hope you read it. I do not have a big ego , so it is not that important that you post it. You guys must be able to read what I type somehow , because I am very careful not to use words that would bump me off. Or the book I mentioned which is loaded with truth may be just too much a dose for your audience and was put on a black list, or maybe the author Wyndham Lewis in 1937 : "Coun...Your..De.." has been put on a black list to keep the sheeple in the dark.
Spain has almost 25 % of unemployment rate, I mean the situation there is terrible.
Italy new prime minister is raising taxes to those few that pay the taxes, it is insane the amount of taxes the middle class has to pay in Italy, around 50%. So at the end yes we are not so bad but we need to improve, the unemployment rate is still very high but comparing with Europe we are in paradise.!
Spain's mixed capitalist economy is the 13th largest in the world, and its per capita income roughly matches that of Germany and France. However, after almost 15 years of above average GDP growth, the Spanish economy began to slow in late 2007 and entered into a recession in the second quarter of 2008. GDP contracted by 3.7% in 2009, ending a 16-year growth trend, and by another 0.2% in 2010, making Spain the last major economy to emerge from the global recession.
THe Spanish economy and growth has been a bit of a myth . Its has relied on a lot of money laundering through building and real Estate and not much else, Even before the crisis the Spanish economy was unable to generate sufficient jobs and its uneplouyment rate was foir years around 18 to 20 percent.
Worldwide banking exposure to Spain is well over €1 TRILLION. What impact do you think that might have on the EU which has an entire banking system that is leveraged at 26 to 1 (Lehman Brothers was leveraged at 30 to 1 when it collapsed)?
Even Ben Bernanke and others have issued warnings that Europe could drag down the US banking system if it crumbles.
"if" is the magic word.
Wrong, Europe is not suffering from too much austerity. It's suffering from not enough. This is the result of decades of a failed socialist utopia in Europe. Obama's a blithering idiot to think that the right direction for America is to follow in the footsteps of the socialist Europe.
Funny, considering how we are actually growing and Europe isn't. Consumer spending drives the economy, no consumer spending, no economic growth. Laying people off is NEVER the correct economic solution.
This has been proven time and again over the past century or so; every time the US has tried reducing spending during a recession [1936 and 1978 being the most famous examples], the economy fell off a cliff. Even Ronald Regan needed to increase Federal Spending by 10% two years running to get the economy moving again for crying out loud.
Republican economic policy would drive the economy right off a cliff. I want to hear how laying off more workers is good for the economy.
We see that with physicians also. Probably true. for things like that.
Italy's unemployment rate is:
2008 6.8 %
2009 7.808 %
2010 8.4 7%
There is no example anywhere at any time of an economic recovery being started, assisted, or abetted by austerity measures. There are many examples, including the current Eurozone crisis, of the reverse. The reason is simple and well-known to economists–it is called the Paradox of Thrift. The Paradox of Thrift serves as a line of demarcation between the theoretical underpinnings of microeconomics and macroeconomics. In the terms of the current, simpliistic debate in the U.S., a national economy does not respond to economic stimuli in the same way as a family. Analogies between family economic performance and national economic performance are false and misleading.
Thank you. Sometimes it makes sense to use the analogy of a family, but the family budget doesn't provide the basis for the entire economy within which it operates, and no one in the family can print new money. the comparison falls down in many ways.
If anyone is counting on Mr. Zakaria to be genuinely sympathetic to Europe's plight (or America's or any other country in the free world incl. his native India) he CLEARLY IS NOT!
His ONLY allegiance is to the Muslim Ummah and will support Muslims on every issue anywhere in the world. This article on Europe's austerity also has a lot to do with the Muslim immigrants (unstated though!) who largely SUCK-UP most of the social welfare funds.
I often scrath my head about the "talent" CNN puts on the air... none more than Fareed Zakaria. Well maybe Anderson Cooper, sort of a close race there. At any rate, it's only matter of time before Aljazeera makes him a better offer and he is gone.
I would be curious to see hat people "thin" a recovery would "look like". With wages stagnent over the past 50 years for 95% of us and taxes just about maxed out, what do people think is going to happen? What happened in 2008-2009 should have happened a decae earlier but the economy was artificially grown by extending easier and easier borrowing to the consumer primarily in the form of the housing market. Everyone i leveraged to the maximum possible extent right now (globally) and that includes consumers (the bottom 95% at least), the government itself (also globally), and the FED (also including the IMF, the WOrld Bank, and other Reserve Banks of the World). The handful of geniuses who "run the world" have painted themselves in a corner. This situation does resolve itself eventually – ever read A Tale of Two Cities?
This is only comparing "miserable" to "not so miserable". On the one hand you have one govt making monetary decisions and it is still in the toilet. On the other you have 14 plus govt's making decisions without any better plan than we have.
You know, you cant talk about Europe and then refer to 2 country Examples Britain and Spain. There are are 27 countries in the EU alone . While there may be overiding tendencies/issues, limiting an analysis and recommendations to this is precisely what gets everyone into trouble. The specific situiation in each country is vey different and requires different sets of measures. You go from Greece which has been allowed to lie about ist macro econ stats for over a Decade and which reveal real backward Balkan country; to Spain, who has has uneployment hovering at 20 percent for years even before the crisis, to Britain (like Portugal where economy growth just cannot sustain its system of social welfare and Governnace, ) and where (unlike claimed in the article) budget cuts cannot be compared to the very brave/stringent austerity measures being undertaken in Southern Europe; to Portugal that is addressing structural issues that date back to a strong socialist legacy inherited after the 74 revolution.
"European economies that have followed the path of cutting spending and raising taxes to reduce deficits are finding themselves in a downward spiral: cutting spending means laying off people, which means less demand for good and services, which means the economy shrinks, which – ironically – means lower tax revenues and thus larger budget deficits."
The logic that less spending creates greater budget deficits relies on the (incorrect) assumption that government spending has greater than a 1x multiplier effect. As long as tax revenues fall by less than government expenditures do, than the budget deficit is reduced. Raising taxes in a period of fiscal contraction, on the other hand, can reduce growth to the point that higher tax rates do in fact generate lower tax revenues.
Dear Fareed,
Your point that Britain is in a spiral because of February's borrowing figures is off the mark. February did have higher borrowing figures than was expected, but this had come after several months of borrowing figures well below expectations (so that means less borrowing) and the large February figures is really just the various government departments spending all they have left because at the end of the tax year they will lose any money they have been allocated and not spent.
The UK's borrowing so far this year is below what was expected a year ago, and is likely to come in many billions of pounds less.
Coming soon everyone... "The Palin Manifesto". Painstakingly handwritten by Sarah Palin herself in that same authoritative literary style she uses on the palm of her hand.
Why are so many in Europe and here in the US so eager to rush towards socialist principles. Time and again throughout history this push toward equality for all has lead to brutal dictatorships like those in Russia, China under Mao, North Korea. You cant get something for nothing. We need to stop with handouts tighten the belt and fall back on self reliance. Europe's currency is higher now but do to exorbanent social programs and an unwillingness to change in the long run it will come crashing down like a house of cards.
It's easy to condemn the austerity measures but it's the difference between short term and long term outlooks. In the short term things will be worse for a while but in the long run it will be beneficial. Again communism always looks good until you run out speding other peoples money.
Here in the US, it;s only a matter of time until we have to face the sam e thing.
Zakaria only credits decreased spending as creating economic problems. Never mind the money taken from the economy to serve government interests at an increased rate–that's always good. http://www.mises.org
Fareed is correct The administration tried to push for huge long-term spending cuts across the board and major structural reforms, particularly to health care. The GOP fought him and attempted to pull the rug out on the recovery and drastically cut the revenue stream, both of which would have made our debt situation far worse in the long run. To boot, they actually have pushed for increased military spending which is crazy.
I don't agree with everything Obama has done but he has proven he knows what he is doing overall. What scares me is that the GOP is currently being driven by a minority that is willing to sink our country just to make a point. This is not the GOP of Reagan, or even G.H.W. Bush.
Wrong! The current administration is clueless. The US economy may grow 2% this year, but indebtedness of the federal government will grow 8-10%. The debt has grown at that pace every year of the Obama administration. Obama has proposed NOTHING to restrain growth in the debt except for the 'Buffet rule'. That feel good legislation will generate $ 47 billion in 10 years. Unfortuantely, the national debt growths that much every 3 weeks. A very hard crash is coming for the US econmy without radical change.
nope. it's bad here too.
this writer is a fool. removing your deficit is never bad. not for anyone, not for any business, not for any country.
Too much ISLAM in Europe. Too much EUROPEAN UNION in Europe!
Fareed, methinks you are too enmeshed in the whole European Union problem. The austerity has worked well for Germany, Finland, Norway, and other northern countries but may not be the best idea for the rest of the zones countries. The breaking of the Union seems to be the only solution.
Did folks forget that during the recession, Europe went the austerity route (like most GOP members wanted) and US went the "print money" route? So far, I guess the "print money" route is working better (ie the stimulus is working....so far).
I agree completely with the comments at the top of this page. During booms you need to be fiscally conservative, and during recessions you have to spend your way out. Obama did the right thing this recession – which we aren't quite out of yet. The problem is our economy is global now, and I don't know how the rest of the world will effect us. Hopefully we can start paying down debt soon as our economy boons. Otherwise, looks like I'm going to start farming to sustain myself after the world economy collapses!
Those who push for grave austerity measure believe that since it works for business it should work for government.When a business lays off workers ,it responsibility stops for that employee.With the government,in many was it has just began.Austerity measures always increase the cost of government ,without a corresponding private sector hiring.The republican emphasis on the deficit is just an coy to impede progress under this administration.They went braindead and claim not to see how good investment and increase in revenue by the government would lead to a healthy economy today and deficit reduction.Then without pause,Congress should have began to address structural expenses such as social security and medicare.
Does anyone read history books about the Great Depression and what caused it and made it much worse? Only Fed Chairman Bernanke seems to have an understanding of what caused it to be so bad. The number one cause for it being so bad was deflation and what all of the governments around the world that caused it. Many people will say that inflation is the biggest problem but deflation is much worse. During deflation people stop spending and start saving more and more money. Look at the current mortgage rate that are available and look at the interest rates on all forms of saving: they are miniscule. The housing market, a major part of the economy has experienced the worse deflation since the 1930s and the housing market has not hit bottom yet.
All of this talk about deficits and inflation is instilling fear in everyone and when people are fearful, they cut back on their spending. The Great Depression was ended by inflationary spending of WW II. Hopefully the Great Recession will not cause another disaster like WW II. During WW II, the US borrowed and spent huge amounts of money on war materials and military forces. All of this borrowed spending is what finally ended the Great Depression. To give you an idea of the spending that was involved, all of the spending on the New Deal amounted to about $25 billion over a period of 8 years (1932 to 1940). During WW II, the US spent about $225 billion in less than 4 years (1941 to 1945). So by spending 9 times as much money in 1/2 of the time, the Great Depression was finally ended. Since war spending is very wasteful, much of the spending was essentially wasted on bombs, ammunition, planes, ships, etc. Imagine how much better the world would have been if all of that money had been spent on useful things like dams, highways, schools, etc. The deficit during WW II was over 30% of GDP. The $225 billion in spending during WW II would be the equivalent of about 6 billion ounces of gold in 1940 dollars. This equivalent to about $7 trillion today.
The US economy is improving at a slow pace. The depth of The Great Recession was so deep that its closest comparison is the Great Depression. Now is the time to borrow money and spend it when the cost of borrowing is so low. Once the economy has improved, then government spending can be cut back.
"The housing market, a major part of the economy has experienced the worse deflation since the 1930s and the housing market has not hit bottom yet"
when every one has a roof over his head or has a decent house, what will make collapsing housing market to turn over!
only gimmicks!
You should only borrow money when the future tax receipts will more than pay for the interest and principal payments on the debt. Unfortunately, now that our debt is greater than our annual GDP, it is time to stop spending, and get the financial house in shape. Keynesian ideas are flawed anyway.
Deficit spending did not end the great depression. It was the vacuum created after the entire world destroyed one another in world war II. You can not ignore the fact that the US was the only superpower left largely untouched by all the devestation. It was the capitalist economy and the ingenuity that allowed our nation to meet global demands. It is easy to recover when everone is looking to you for everything. Roosevelts socialist pollicies and his willingness to spend money on a bunch of infrustructure had very little to do with it.
Zacharia, with all due respect. You are quite intelligent man, and I value you for that, but you know little about Europe! Every country is different, but some things, more or less are similar. Let's take austerity. Indeed there is more austerity in Europe. But she is blessed with it, not "suffering because of it" (I take out Greece). Did you know that Poland has no Medicare? Think, America's Medicare will go bankrupt in 2024. It looks like this particular austerity pays! But this isn't all. Europe, Poland in particular, but not only, has millions more homeowners per capita, than the U.S. Talk about Austerity versus the American Dream. I will take austerity all the time. Why so. Because in your own home you are free to go hungry, as do many homeowners in Poland. Their homes afford them a freedom to suffer with dignity! ,which America can only dream about!
"European economies that have followed the path of cutting spending and raising taxes. Take a look at Britain. ...and raising taxes." - how much more proof does one need that raising taxes hamstrings an economy? Cutting spending - good, raising taxes - not so good...
Don't forget the mass unemployment in Europe – a chronic condition since it's very hard for employers to fire crummy employees. Employers, consequently, don't do much hiring. Especially among minorities like Muslims. It's the result of decades of evolving a leftist society. It's never worked – economies there are nearly always weak, unemployment is always high and ethnic groups are perpetually disenfranchised. By jove! I think we should adopt that! Hope and Change! Hope and Change!
Zakaria is just wimp with stupid thoughts and ideas...he never knows what he is talking about nabd it is past his time to take his meds for his mental state of mind...he thinks he is a legend...only in his mind...problem is he thinks he believes everything he says...
Ugh! He's just another bleeding liberal who operates from a Hope and Change point of view that is grounded in fantasy.
Republicans left Obama the worst recession since the Great Depression. He rescued the U.S. and world economies. Now is time to tax the rich to pay for safety net programs and to temper their rapacious greed.
But, Babs, you elected him to CHANGE all of that. What happened?
YOU OBAMA STOOGES ARE SO STUPID ... AND, YOU CAN"T FIX STUPID. AMERICA IS FINALLY WAKING UP TO WHAT AN UN-AMERICAN, INEPT, SELF-SERVING, LYING SNAKE YOUR EMPTY SUIT PHONY MESSIAH IS ... IN NOVEMBER, YOU FOOLS WILL BE NEUTERED, WHICH WILL BE THE FIRST STEP TOWARDS RETURNING AMERICA TO ITS FORMER GREATNESS. GOOD RIDDANCE, TRAITORS.
I agree, Fareed! Austerity is just a buzz kill, dude!
Let the fed raise the interest rate and then we'll see how all this spending has affected the economy. Can we say double didget inflation.
That would be bad. If we go to war over anything...
It's been my personal experience that "too much austerity" pretty regularly follows a long period of too much spending and debt. But then, I can't print money like governments can. But then again, I can't take on even more debt to do that or cause inflation either.
Are there any long term studies on what Britain did.
I mean in the 90s America went through a deregulation period, which seemed to cause a boom. But then we had a huge collapse.
So I am just wondering that if in the long run. with spending under control, if Britain will be better off. I don't get how people think that things are going to change overnight. It may take years or even decades to see the full results.
Dumbed down its like getting your own finances in order. Yeah for a while you're eating mac and cheese and it starts to suck. But then you pay off your credit cards. Which gives you more money to spend per month. So start to eat better, and are not in debt.
dois not one think, that concern and the methods to boost the economy od Europe are similar to the marxist Soviet era artificial experiments to take the country more forward than western liberal economies, that failed!
under stress the nations/societies act similarly!
Only a government thinks it can spend it's way out of debt
Europe has hit the breaking point of financial distress, Any course other than austerity is now foolish. There are no other options. When you borrow at 5% to gain a 1% increase in GDP, that leads eventually to financial distress. It never pays for itself. Nor do all the social spending programs pay for themselves. When you create a system that produces long term 1% growth and 10% unemployment, you will eventually run out of other people's money.
Well, whaddaya know? in a recession , you don't focus on the deficit. Europe's austerity measures are the wrong thing to do in a recession. Imagine if we followed the GOP desire to make big slashes to spending a la Europe. We would be in THEIR predicament.
The stimulus a few years ago should have been bigger .. much bigger ... for example, putting unemployed middle class to work on fixing our decaying bridges and roads. Then we would have been far clear of this recession by now.
You must be one of those people complaining that the rich don't pay their fair share. Forget politics, look at your own finances, can you keep affording the constant property tax increases? Many can't and are being pushed to the welfare lines and out of their homes. All this to keep public employees sert for life? to H E Double hockey sticks with them, cut their jobs, cut their pensions, cut their benefits. The taxpayers can't foot your bills anymore.
They are printing so many dollars before long it will be sold as toilet paper which may become more valuable. America and the world is on a path of unsustainablility. We are going to have to reduce population and reduce the strain on natural resources and go back to being sustainable and self reliant. Consuming less and being more efficient will become a necessity. Save your money and plant that garden because there is a lot of uncertainty in the world.
You and your fiends sound so hopeful-on the negative side.
hehehe...
If cutting government spending means so many layoffs that it significantly affects unemployment, it means only one thing: Too many people work for your government. It is more proof that strong central government that includes reliance on government controlled industries doesn't work.
And another thing: looking on enviously at America's growth rate is silly- all supposed gains are temporary and built on a house of cards of unsustainable "stimulus" and unstable currency flooding the economy
Someone will inevitably point you to the "surplus" of the 90's, generated by a booming economy. What they'll fail to mention is the zero sum gain we made against our national debt, even during the boom. Big [elected] government can't solve these problems. Smaller government or loss of democracy. That's what it will come to my friend.
This is an incorrect statement. National debt was paid down in the 90s boom (reduced by about $1T from 1994 to 2000). In 2000, our national debt was about the same as around WW1. Today, it's about the same as the start of the Great Depression and a bit less than half of national debt after WW2. Comparison was done in CY2010 dollars to make a fair comparison. If the comparison is done as a fraction of US GDP, its lowest points were about 1973 and 2000. Its highest point is after WW2. Today, we are at about half of where we were after WW2.
It's an entirely correct statement. In pure dolllars, the debt has increased every single year since 1969. In 1990, it was around 3 trillion. 2000, 5.5 trillion. 2012 14 trillion. You can play games with percent of GDP, inflation etc. But the simple fact is we've paid nothing back in any meaningful way since 1940. Period, end of story.
Zakaria, another lackey mouth piece for the liberal left machine again shows his true colors as one who is against any sort of fiscal responsabilitythat might impunge upon the need for everyone to face the facts and pull there own weight. We need to put the hammer down and reduce our financial committments to any and all social welfare programs until it brings our deficit down to zero and we start to show a surplus.
This is all a really simple problem. You shouldn't have the ability to vote for your next boss, and that's what happens in any large government. I vote for the guy who's going to give me a more stuff. Eventually there's a shortage of stuff, so the guy I voted for is going to try taking it back. So I vote for the guy who says he won't. Again, not enough stuff. So my boss borrows stuff from someone else, and I'm happy. Eventually the guy who lent the stuff wants it back, with interest. And again my boss takes my stuff away. So I vote for a guy who can avoid paying back the stuff. it goes on and on until the guys who lent the stuff are my bosses, and they close the voting booths. The answer? Tiny little volunteer government. Else a dictatorship. Pick one.
You can only cut expenses so far. In a recession, it's more important to increase income (i.e. increase jobs) than to cut expenses (i.e. decrease spending). Compare to a personal/family budget. You can only cut food, clothing, etc. so far, and some expenses you can't cut at all like rent/mortgage, property tax, car loan, and some expenses actually go up like fuel, electricity, etc. Households typically incur more debt during a non-working period (i.e. recession), and this is managed as well as possible and paid down in better economic times (like we did in the 90s). It's really not that complicated–it's amazing how far some common sense goes.
Normally I would agree with you. However the Taxpayers around the world are stretched to their limits. Here in the USA alone the increasing property taxes are crippling the US family. If they are mot going to address pension and pay reform then we have to keep cutting until these leeches get the point. The taxpayers can not continue to pay and pay, we have to draw the line. We need Major cuts in all prgrams, we need pension reform, we need these public leeches to have their salaries reduced. They can cry all they want but they have to realize they are crippling their neighbors with their demands.
There are 3 main sources of economic stimulus in the world. The most effective is war. The next is the threat of war. The last is exploration (to get away from war). Looking at the US economy over the last 100 years, the strongest years of our economy was WW2, followed by the Cold War (military-industrial complex, weapons build up, infrastructure build-up like Interstate highway system), followed by a period of exploration (50s/60s space/moon race, which was mostly driven by the Cold War). The mid 70s brought basically the end of the space exploration program, and the economy tanked and basically stayed flat until we increased war preparations again in the mid 80s and outspent the USSR, causing their collapse. The 90s brought new markets (exploration) so we had a boom, but 2000s ended that when we were reminded that there are still enemies out there so we went to 'war' with them. Unfortunately, the economic boom that follows that is slow to follow since the wars are not really over, and new wars (Middle East) are civil wars so not benefiting the US military-industrial complex. We would have to wait for those to calm down before entering a new period of 'exploration'. Probably the best thing to do now is proactively develop new technology and start a different exploration period, like mining asteroids or getting to mars or something.
You make a common mistake, Mike. Wars don't stimulate the economy. WWII created a manufacturing infastructure that led to a boom after the war. It also paved the way for our government to borrow on a scale no one would have tolerated before the Depression, that continues to this day and undermines our very Democracy. Economic booms since WWII had nothing to do with wars. We dominated several industries early in their life-cycles. Auto, aviation, dotcom etc. The private sector is always the source. Occasionally the government gets lucky, as with Tang and Memory Foam. If private industry had dumped the kind of money into space programs that the Fed did, we'd have folks living on Mars. If the government hadn't taxed the heck out of us the last 60 years, we'd be far better off and far more advanced. Don't drink the Koolaid. The government can barely deliver mail. They've sold China 7% of your children's future earnings, regulated manufacturing out of the country, handed out fish instead of fishing polls. We need less of them.
Sorry Fareed you are wrong. Most of the Nations need to cut the strings on far more programs. Here in the USA we can for once get a jump on things by cutting deeply into all the programs possible. From A-Z.
What noncense! Fareed Zakaria does not understand the economy in the EU which is based on exports to other countries. It is NOT a Consumer-Based Economy like in the US. In Northern Europe the countries export more than they import and goverment austerity will benefit the economy and make the currency stronger. The only way a country can pay back a foreign debt is to export goods. Does anybody remember Italy's old currency, the Lira and how it lost it's value. Italy & Spain has continued with the foreign debt and is now undermining the Euro.
You can have some pain now by implementing austerity, or you can have total collapse later.
The Europeans for the past decade or two borrowed money to also grow their economies by government spending "stimulus". They did such a good job of "stimulus" that governments went very deep into debt and can't pay the money back or borrow more money. So short term stimulus gain gave them long term bankruptcy, negative growth, and forced austerity. Only a fool (democrats and liberals) would want to follow this European "stimulus" disaster.
What is needed is obviously more debt. Trillions are not enough. Lets just keep writing blank checks that go nowhere with money we dont have. That will magically end the liquidity trap (or cause it to worsen, more likely). Interest rates are near ZERO anyways. Some in the US want the benefits of Europe (socialized medicine, easy working hours, long vacation) but do not want to pay the price (DEBT, absurd rate of tax). Keynesian talking points from the mouthpiece of statists with the name "liberal".
All EU war alleys of USA who invested billion or probably trillions should send their 'War Bill' to US Treasury to recover their war expenses. The USA coalition EU forces are bankrupt in mostly USA manipulated wars. USA loves to use others finance and soldiers to fight their war interest mostly to dominate oil markets. Majority are filing for Bankruptcy or Austerity and not one of these US poodles admit their war involvement has screwed-up their finance because all will learn the EU were like 3 blind mice who all ran after the Farmer Wife or a blind leading a blind. I hope they learn their lesson of life to stay away from two war evil nation nations, Israel and USA...
Ha Ha. To all you U.S. haters lets just pull all our troops back from all around the world and stop all foreign aid. We can sit back with some popcorn and watch everything collapse. Unrest in North Africa, genocides in the middle east, war in korea, and taiwan, untold starvation on the African Continent, crumbling governments in Europe and no one with a military strong enough to stop the next crackpot dictator to try and conquer Europe under the ruse of equality for all or environmental justice or whatever.
USA and Europe need to export their problems in order to solve their economic woes. Both are matured societies and in wealth protection mode. GDP growth is not in the offing in the short haul for these societies. The way out for them is to open and develop the markets overseas.....not China et al with billion+ population and flattened GDP.... but countries with relatively large populations and pent up demand. The likes of Pakistan, Indonesia, Mexico, Brazil, North Korea and many others that can spin on a dime. Not necessarily based on the British East India Company model which led to enslavement of India in 1800s (effects still continue) but more on the paradigm of pari passu growth. This will require fresh thinking, brilliance of mind and a new way of looking at the world.
Does Fareed have an answer? No, not really, maybe he should move to Europe since he seems to know it all! I would even pay for him to move there. I do not care for his opinion, not sure it's even warranted. He doesn't live in Europe, so how could he know what is best for them. Must be a democrat.
but last week you were demanding that we Americans pay more taxes! Lack of taxes is not the problem. A selfish, dumb as dirt government, who has no sense of working within a budget, is the source of our issues along with trying to make the USA a welfare state. We are the USA. We are not Europe. We have a different system. Thus, invalid to compare our attempt at recovery with Europe.
Mr Zakaria, last week you were demanding that we Americans pay more taxes! Lack of taxes is not the problem. A selfish, dumb as dirt government, who has no sense of working within a budget, is the source of our issues along with trying to make the USA a welfare state. We are the USA. We are not Europe. We have a different system. Thus, invalid to compare our attempt at recovery with Europe.
Please do not compare US with Europe. And also, while at it, please stop suggesting that the European problems are the cause of sluggish economy in US. Now, equally nonsensical is to say that US economy is growing. The numbers the Government is making up, are not making sense. Inflation has started to bite, and for years now bankers are getting cheap money from Fed, while retirees have to play outrageous taxes everytime they withdraw from their IRAs.
As for Europe, please do not mix things up. The austerity is the problem? And what is the solution? To let the unelected new Fund impose banking cartel on Europe, in the name of giving credit to debtor nations - to improve their economies? This is a MONSTROUS proposition. Greece is burdened not by their debt, but by the criminal interest on the debt. At 18%, Greek debt DOUBLES every four years. That is not the money they borrowed or spent on their "lavish" lifestyle. That is the money paid forcibly to the banking cartel that can AT WILL decide how much interest countries will pay. And if Europe ratifies the Fund, there will be NO LEGAL OR LEGISLATIVE RECOURSE TO THE FUND'S AUTHORITY. This is called SLAVERY. So, are you just advocating that Goldman Saks takes over Europe through its unelected ex-Goldman executive, Mario Draghi - whom you support? So, what IS the alternative? German insistence on FISCAL PACT, that is, euro member nations meeting rigorous deficit guidelines - is not good? OK, it is not good, as it will bring about catastrophic economy. Agree. But to let Mario give lavishly to banks in the name of "saving" anyone, is ridiculous! No matter how much money Mario spends, he will just be coming to EU countries demanding that they IN SIX DAYS PAY OUT ANY AMOUNT HE DEEMS NECESSARY. And he is not legally liable FOR ANYTHING? iS THIS A SOLUTION? No, it is not. Therefore, the best thing for Europe would be that Sarkozy loses the election. And that Germany gets anyone else who DOES NOT SUPPORT BANKING CARTEL. With new partners, EU will have some teeth in negotiating with those who are sucking the life out of European economies. And there is another alternative: let each country have its own central bank, managed by their own government not private cartel. Then they can - among themselves - decide how to deal with the banking cartel, as well as the bevvy of "instruments" that are imposed on them. Financialization of European economy is about to kill them - and radial solutions are needed. For starters, Euro Zone members can pay off amonts that were really borrowed, not criminal interest. And each country that will have its debt erased in such manner should be not allowed to borrow on private markets. If anyone does that, it must be expelled from the union - and left to the tender marcies of the banking giant squid, and prescriptions advocated in this article!
They already tried letting each country have its own central bank except back then they utilized different currencies which was more successful than what they're doing now! Likewise, having a common currency amongst different countries is similar to having to many captains on one ship.! The Brits were smart and stayed out of the EU currency debacle, because there is no central governing authority that prevents out of controll spending! ...Greece!
I think when the textbooks are written in 20 years they're going to point to this as proof that austerity programs don't work. As Paul Krugman said, what did this crisis teach us about economics and Keynesianism? Basically nothing new. All of this is already established knowledge.
There he goes! He's been saying it for days. How wonderful that we have a 2+% growth, while Europe has -10%. He feels that by comparing us to Europe people will forget the current feeble condition of our economy, and that we will feel all giddy about Obama's policies. Keep up the good work, Zakaria. Pretty soon you will have so little credibility you won't be able to help Obama anymore. I'm an independent, but your ridiculous, constant pro-Obama articles are getting old. Pretty soon I'll be reading FOX! Ouch....
We are only a few years away from having the same debt to GDP ratio as Greece. If people in this country do not begin to wake up and smell the manure that is being spread by "certain" politicians, it won't be the Republicans taking away money from senior citizens, poor children, and the disabled. It will be the holders of the US debt (China and others) that will be demanding it.
The head of the IMF, Christine Lagarde, says that there are “dark clouds on the horizon” for the global economy.
The top economist for the IMF, Olivier Blanchard, recently made this statement: “One has the feeling that at any moment, things could get very bad again.
George Soros is publicly declaring that the European Union could soon experience a collapse similar to what happened to the Soviet Union.
A member of the European Parliament, Nigel Farage, stated during one recent interview that it is inevitable that some major banks in Europe will collapse….
There are going to be some serious banking collapses and the impact of that on some sovereign states, will be serious. I’m afraid we’ve gotten to a point where we really can’t stop this now. We’re beginning to reach a stage where however much false money you create, the problem becomes bigger than the people trying to solve it. We are very close to that point.
When I talk about the threats and the risk that this thing could wind up in some kind of rebellion, some sort of awful social cataclysm, they (other European politicians) are now very worried indeed. They will talk to you in private, but in public, nobody dares utter a word.
I think the deterioration, in the last two or three weeks, in the eurozone is very serious indeed. It’s the bond spreads in Italy and Spain. It’s the fact that youth unemployment is now over 50% in some of these Mediterranean countries.
It’s riot and disorder on the streets. And yet a month ago I was here and there was Herman Van Rumpuy telling us, ‘We’ve turned the corner. Everything is solved. There are no more problems with the eurozone.’ What a pack of jokers they look like.”
Over the past six months, hundreds of prominent bankers have resigned all over the globe. Is there a reason why so many are suddenly leaving their posts?
The 9 largest U.S. banks have a total of 228.72 trillion dollars of exposure to derivatives. That is approximately 3 times the size of the entire global economy. It is a financial bubble so immense in size that it is nearly impossible to fully comprehend how large it is.
The financial crisis of 2008 was just a warm up act for what is coming. The too big to fail banks are larger than ever, the governments of the western world are in far more debt than they were back then, and the entire global financial system is more unstable and more vulnerable than ever before.
But this time the epicenter of the financial crisis will be in Europe.
Outside of Europe, most people simply do not understand how truly nightmarish the European economic crisis really is.
Spain, Italy and Portugal are all heading for an economic depression and Greece is already in one.
The European Central Bank was able to kick the can down the road a little bit by expanding its balance sheet by about a trillion dollars over the last nine months, but the truth is that the underlying problems in Europe just continue to get worse and worse.
It truly is like watching a horrible car wreck happen in slow motion.
The good news is that there is still a little time to get yourself into a better position for the next financial crisis. Don’t leave yourself financially exposed to the next crash.
Sadly, just like back in 2008, most people will never even see this next crisis coming.
Romania's government fell Friday in a no-confidence vote, as opposition parties seized on widespread public anger over biting austerity measures, cronyism and corruption.
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