Greek Foreign Minister Papandreou is out selling the new austerity package to his Parliament. He wonders why Greeks are rioting in the streets. How would you like to see your taxes go up $ 4,000 per year next year? That's what a typical family of four in Greece will face under the proposed austerity plan, according to calculations by a Greek newspaper, To Vima.
That is only the beginning. This austerity plan is merely a small down payment on a massive effort to stem the huge budget deficit. There is no hope of a budget surplus. This plan is intended to slow the growth of debt, not reduce it. Reducing debt would require far, far larger sacrifices.
Papandreou assumes that citizens that have been told for generations that they are entitled to early retirement, free health care, free education...essentially free everything..will now pony up to pay for all of this free stuff. I have my doubts.
No way Greece will implement this plan. No way. The Parliament may pass the plan, but it will not be enforced or implemented in what is arguably the most corrupt government within the European Union.
Senin, 27 Juni 2011
Minggu, 26 Juni 2011
Call Biden's Bluff
There is no time like the present to bring an end to the massive US fiscal deficits. Congress should vote a resounding "no" to an increase in the debt limit. Force the issue. It is the only way any progress will ever take place. It gets no easier later. Now is the time as Senator Obama pointed out five years ago, when he voted, as a senator, not to increase the debt limit. He was right then, he is wrong now.
For example, moving the age limits on social security saves a lot more money if you do it now, than if you do it one year from now or five years from now. Why wait until all of the baby boomers have retired and the problem is a multiple of what it is today. Do it now!
This is the time. This is the place. Folks like Senator Warner of Virginia claim to be moderates, but their voting record is to the left of Barney Frank. They are preaching that if we don't raise the debt ceiling, there will be catastrophe. Thanks to senators like Warner there has been an ever escalating deficit. He knows that he won't be there when the ultimate catastrophe comes. All Warner wants is the ability to waste more taxpayer dollars and postpone dealing with the problem, so that he can get re-elected. That's why he wants a "clean" debt ceiling increase bill.
Congress should call Biden's bluff. A poll taken in the last few days shows that the public favors a "no" vote on raising the debt ceiling by a margin of 41-38. Every Congressman who votes to increase the debt ceiling should lose his seat -- Democrat or Republican.
For example, moving the age limits on social security saves a lot more money if you do it now, than if you do it one year from now or five years from now. Why wait until all of the baby boomers have retired and the problem is a multiple of what it is today. Do it now!
This is the time. This is the place. Folks like Senator Warner of Virginia claim to be moderates, but their voting record is to the left of Barney Frank. They are preaching that if we don't raise the debt ceiling, there will be catastrophe. Thanks to senators like Warner there has been an ever escalating deficit. He knows that he won't be there when the ultimate catastrophe comes. All Warner wants is the ability to waste more taxpayer dollars and postpone dealing with the problem, so that he can get re-elected. That's why he wants a "clean" debt ceiling increase bill.
Congress should call Biden's bluff. A poll taken in the last few days shows that the public favors a "no" vote on raising the debt ceiling by a margin of 41-38. Every Congressman who votes to increase the debt ceiling should lose his seat -- Democrat or Republican.
Jumat, 24 Juni 2011
Leave the Oil Market Alone
Obama's decision to release oil from America's strategic reserve is another bone-headed, political decision designed to rescue his collapsing state in the polls. It is bizarre that a President who claims to support alternatives to fossil fuel energy objects to the rising price of fossil fuel energy. There really is no other way to stimulate alternative energy than to let prices of fossil fuel energy rise and let the market produce alternatives. There simply is no other way.
This is truly an administration that believes government can work wonders. The only wonder is why they believe that. The sobering facts of what has happened to the economy under this administration is a compelling testament to the failure of government to create jobs and improve economic performance. Now, these folks think they can solve energy problems by lowering the price of fossil fuels. You wonder if anyone in this administration knows anything about economics.
This is truly an administration that believes government can work wonders. The only wonder is why they believe that. The sobering facts of what has happened to the economy under this administration is a compelling testament to the failure of government to create jobs and improve economic performance. Now, these folks think they can solve energy problems by lowering the price of fossil fuels. You wonder if anyone in this administration knows anything about economics.
This is Why Politics Has a Bad Name
Are they kidding? Merkel and Sarcozy. Is Greece really going to accept economic devastation for at least a generation to pay back German and French bankers? Is there anyone out there who thinks this is really going to happen?
There is no way Greek citizens will agree to this. It is not politically possible. The Greek Parliament may pass whatever legislation that it feels like passing, but enforcement will not take place. There are few governments or countries in the world where corruption and tax evasion is as rampant as Greece. This is always the outcome of of an ever burgeoning government.
European Union officials believe, as Obama believes, that raising tax rates will generate revenues. In fact, raising tax rates last year in Greece led to a substantial decline in tax revenues.
What is happening in Europe is typical of modern politics both in Europe and in the US. Pretend politics. There are few, if any, statesmen in Europe who are behaving rationally these days. Remember the Treaty of Versailles? How did that work out for you?
There is no way Greek citizens will agree to this. It is not politically possible. The Greek Parliament may pass whatever legislation that it feels like passing, but enforcement will not take place. There are few governments or countries in the world where corruption and tax evasion is as rampant as Greece. This is always the outcome of of an ever burgeoning government.
European Union officials believe, as Obama believes, that raising tax rates will generate revenues. In fact, raising tax rates last year in Greece led to a substantial decline in tax revenues.
What is happening in Europe is typical of modern politics both in Europe and in the US. Pretend politics. There are few, if any, statesmen in Europe who are behaving rationally these days. Remember the Treaty of Versailles? How did that work out for you?
Selasa, 21 Juni 2011
Sell The Rally
"Stocks up on news of a Greece settlement," read this morning headlines. Stocks are cheap, no doubt. But, stocks are cheap for a reason. Economic policy in the US threatens to push the economy into a second recession and Europe is turning a small problem into a potential financial conflagration. This rally is going nowhere. Sell it and wait for more rational times (or even cheaper stock prices).
Senin, 20 Juni 2011
From Molehill to Mountain
Greece is a small country with an estimated 11.3 million in population. It's total GDP was about $ 320 billion in 2010. So, why all the hubub. Why can't Greece default on its nearly $ 400 billion national debt? It is not going to be able to pay it and it's debt is growing currently at nearly $ 50 billion annually. With these numbers, why are France and Germany so intent on stepping in and turning a molehill into a mountain.
Politicians are obsessed with fixing things and so long as disaster is unlikely on their watch, they proceed. Obama doesn't have to worry. The US is not likely to go bankrupt within the next four years. Within the next ten years, that's a different story. But, he won't be there then, so what does he care?
Sarcozy and Merkel are obsessed with the same mindset. They don't want disaster on their watch. So, kick the can down the road and set the stage for a far bigger disaster on the next guy's watch. Such statesmanship!
Democracy is a tough game (for the electorate). It is easy to promise and hard to deliver. But you can get elected on a promise and by the time folks find out that you didn't deliver, you've bought your own island somewhere and what do you care. That is the kind of cynicism that permeates the folks who think government can solve all problems. They are not there when disaster strikes.
So, the European Union pushes the car closer to the cliff's edge, thinking it is doing something worthwhile. Only the car is now a bus and has many more passengers and the size of the bus and the number of passengers are growing every day. It is obvious that the bus is headed over the cliff. The only thing we don't know is how big the bus will be when it goes over and how many passengers are going to go with it.
Politicians are obsessed with fixing things and so long as disaster is unlikely on their watch, they proceed. Obama doesn't have to worry. The US is not likely to go bankrupt within the next four years. Within the next ten years, that's a different story. But, he won't be there then, so what does he care?
Sarcozy and Merkel are obsessed with the same mindset. They don't want disaster on their watch. So, kick the can down the road and set the stage for a far bigger disaster on the next guy's watch. Such statesmanship!
Democracy is a tough game (for the electorate). It is easy to promise and hard to deliver. But you can get elected on a promise and by the time folks find out that you didn't deliver, you've bought your own island somewhere and what do you care. That is the kind of cynicism that permeates the folks who think government can solve all problems. They are not there when disaster strikes.
So, the European Union pushes the car closer to the cliff's edge, thinking it is doing something worthwhile. Only the car is now a bus and has many more passengers and the size of the bus and the number of passengers are growing every day. It is obvious that the bus is headed over the cliff. The only thing we don't know is how big the bus will be when it goes over and how many passengers are going to go with it.
The Plight of Papandreou
Why is Papandreou, Greece's prime minister, struggling to convince the Greek public to cut spending and raise taxes? At the moment, Greece is spending 25 percent more than their tax revenues, which means their national debt is continuing it's upward spiral. There has been no progress since the last year's bailout. No, indeed. Things have gotten much, much worse for Greece's finances, not better.
The problem for George Papandreou is the political rhetoric of the past half century. Politicians like Papandreou and his economist (sic) father Andreas Papandreou have, for several generations, preached to the Greek population that they could have it all -- free health care, free education, free everything, plus early retirement with a fat pension. Everything is free in the wonderful Papandreou state. Nothing need be paid for. That's what Papandreou and his father have been telling Greeks for the past fifty years.
Guess what? They lied. Providing all manner of free and inexpensive stuff to folks doesn't work unless there is someone out there who is willing to fund all of this. The fact is, in the long run, there is no one willing to fund the Greeks in the style to which the Papandreous wished them to become accustomed. The Papandreous were frauds and now the Greeks and other Europeans are angry, confused and rioting. Who wouldn't be angry and confused?
Papandreou deserves his current fate. He helped to create the problem and cheerlead the fraud that led to the current problems in Europe. Why Obama is choosing to follow this path is a great mystery.
The problem for George Papandreou is the political rhetoric of the past half century. Politicians like Papandreou and his economist (sic) father Andreas Papandreou have, for several generations, preached to the Greek population that they could have it all -- free health care, free education, free everything, plus early retirement with a fat pension. Everything is free in the wonderful Papandreou state. Nothing need be paid for. That's what Papandreou and his father have been telling Greeks for the past fifty years.
Guess what? They lied. Providing all manner of free and inexpensive stuff to folks doesn't work unless there is someone out there who is willing to fund all of this. The fact is, in the long run, there is no one willing to fund the Greeks in the style to which the Papandreous wished them to become accustomed. The Papandreous were frauds and now the Greeks and other Europeans are angry, confused and rioting. Who wouldn't be angry and confused?
Papandreou deserves his current fate. He helped to create the problem and cheerlead the fraud that led to the current problems in Europe. Why Obama is choosing to follow this path is a great mystery.
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