The real question is: Who is going to bail out the U.K.? They aren't part of the Euro cluster f*ck. They are in awful shape, and I guess the only entity left to save the U.K. is the I.M.F.
Now who is going to save the IMF?
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Lets not compare apples to oranges here. Greece has an oversized public (government) sector that offers lots of salary and benefits, while more "diversified" (smarter) countries like Germany and France and even the UK in places are pretty good at being "socialist paradises." It's just a question of how well managed you are and how much over-promising and over-borrowing you do.
In the case of the USA, we voted for politicians for the last 30 years (Reagan & Bushes primarily) that promised smaller taxes on the baby boomers, so that the boomers could have their McMansions and SUVs. We saved nothing for their retirement. Now with nothing in the bank, these older boomers will expect their benefits no matter what the cost, even if we don't have enough to pay them. This is called "shortsighted" or "Grecian" management. :)
The big advantage the UK has is that it can devalue its currency and hence its debt. The Euro prevents Greece (and the other PIIGS) devaluing, so you're right, the noose will strangle them for a generation.
But the USA is also being strangled because the dollar should have devalued by now - its being held up only because of its reserve currency status.
That doesn't mean the Greece crisis won't have an affect - forget the gov't declared 1/2%rates, real interest rates are already at 4% - 8% for banks and bonds, which means borrowing rates from 8 - 14% for companies.It can only get worse.
As China increasingly dominates world trade, at some point the balance point will shift and the Yuan will dominate, especially for oil and commodities. Then the dollar will find its true value (and I'd guess that China will buy anything of value in the ensuing firesale). But that's probably a few years away yet
The PIIGS just need to figure out who is responsible for rating their countries; then buy him a house, and a boat, and his wife a fur coat. That should fix their ratings woes, and let the sweep it all under the rug for a spell.
80% of Federal spending is in five wildly popular programs that will never be cut: Social Security, Medicare, Medicaid, Defense and Interest on the Debt. 80%. Everything else is small potatoes.
If you don't want to provide the benefits, fine. But if you do (and all the voters demand that you do), taxes have to be high enough to generate enough revenue.
The (Arthur) Laffer curve which said lower taxes result in higher revenue, is just that .. a laugh. There's no basis in science or fact for the Laffer Curve, and since the deficit has been rising pretty much since 1980, whatever revenue gains existed was short-lived.
As an aside, the Tea Party movement will come to an end soon enough, cause it doesn't acknowledge what I said above ... yes, we can all be upset about government borrowing and spending. But there's a second part being ignored .. the money being borrowed and spent is on the Tea Partiers themselves .. on Social Security and Medicare! Hypocrites. :)
If a person can't make a point in a few sentences or paragraphs, I find most people don't even bother listening. ;)
There's only one Way to kill capitalism-by taxes, taxes and more taxes.
Karl Marx
Reagan Tax cuts
1.In 1980, the last year before the tax cuts, tax revenues were $956 billion (in constant 1996 dollars).
2. Revenues exceeded that 1980 level in eight of the next 10 years. Annual revenues over the next decade averaged $102 billion above their 1980 level (in constant 1996 dollars).
3. Any increase in budget deficits was therefore the result of spending increases rather than tax cut induced revenue decreases. GDP grew at average of 9.6% from 82-88.
Bush's tax receipts averaged 18.4 of GDP. The 40 yr average was 18.3% of GDP. I find it hard to rectify your statements that the bush taxes cuts affected housing/SUV utilization.
I would only change “we” to “they”. What the hell does it have to do with me, everyone 40 and up made these decisions and my generation will have to pay for it.
Concise for you :)
So Any thoughts on this estimated 142 billion dollar bailout of Greece, apparently recently finalized?
If this involves major cuts tied to this loan, then are things going to get crazy, they were already having some civil unrest over there?
It might be interesting to watch, as the States face their "austere" budget cuts by 2011 when stimulus funds run dry. Of course, I suppose I'm a Cassandra type--maybe the economy will ride the magic unicorn to 10% growth, and they 7 million men who lost jobs in the last couple years can all get 'green energy jobs' or can all get hired making Ipads and working in the unreality business that seems so prominent be it movie's or often times the news.
-Meiyo
Given that Greece is small potatoes compared to Spain or Italy, it looks like th EU has signed up for a couple trillion in bailouts. That'll make for a stronger dollar, higher gold and oil, weaker economy in Europe. In other words, it's bad for everybody.
Regards,
Coal Guy
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