Remember that $400 billion increase in debt recently enacted? Well it is gone and it only took six weeks. Washington has quite a talent for spending debt, which is other people’s money. Not satisfied the Senate, as we reported, added in another $500 billion. The media covered up the increase in debt by making a major issue of the President’s speech concerning jobs.
The enabling super committee is at work cutting $2 trillion from the budget. This supposedly will be concluded by November. These cuts were not designed as such, but they will help slow any recovery, as will any tax increase. As the CBO says, the wrong thing at the wrong time. Even with cuts and tax increases about half of federal government spending will be borrowed. Worse yet, most of any cuts will come from Social Security and Medicare, which are not entitlements, but are benefits the public paid for. Government wants to play Robin Hood, take from those who sacrificed and paid for the benefits and give to those who paid nothing into the system. As the enabling committee works behind closed doors the administration tries to use the debt problems in Europe, particularly in Greece, as a cover to shroud the problems in the US, which are potentially much worse. The US has no greater prospect of paying off its debt then does Greece or any of the other five close to insolvent nations. As serious as Europe’s problems are the focus should really be on America’s debt problems, because they will exert a greater impact worldwide, if for no other reason than the US dollar is the world’s reserve currency.
As in America, Europeans are being railroaded into bailing the banks out and will as the sick six sovereigns. That process could take ten years of subsidies and $6 trillion, which could unfairly bankrupt all of Europe. On top of all this financial horror waiting in the pipeline are carbon taxes. Including VAT the average taxation is 70%. We wonder how long it will take for revolution?
In the recent G-7 meeting in Marseilles, France, the members couldn’t identify the problems, much less analysis and solutions. The only cogent comment of value from their point of view was the banks would be bailed out no matter what the cost. So what else is new? We noticed there was little or no reporting on the conference, probably because they accomplished nothing. Of course, they were all for economic growth, strong financial markets and accommodative monetary policy. This lack of success was in part the reason of the plunge in the stock markets that followed. That is the state of world leadership.
