04 December 2010

Neither Washington nor Wall Street Understand Economies

Freedom and Prosperity

If the US cannot wake itself from its anti-market delusions quite soon, that nation and the rest of the world is bound to suffer far beyond current expectations.

Stock prices and commodities have risen, but these signs of life are not supported by the real, underlying US economy. And it is the reviving of the US economy which most of the world is waiting for -- despite widespread claims to the contrary. From Berlin to Beijing to Brasilia to Tokyo and far beyond, the long interactive network of international markets are waiting for the sleeping giant to awaken. But as long as the US is led by an anti-market executive and Senate, the reality behind the news will not be good.

Morgan Stanley and Iran are saying that $120 oil is coming, and everyone will be fine, but the truth is, everyone will not be fine with $120 oil.

The underlying numbers do not support a sustained recovery in employment or significant private, non-governmental sectors of the economy, despite the wishful thinking of the clueless.

Debt and demographics are combining to doom large parts of Europe to violence and economic stagnation. The same destructive combination is coming to US states which have overspent their futures on the salaries, benefits, and pensions of current government employees. Not to mention the federal government's entitlement avalanche which is inexorably heading toward the $100 trillion (with a "T") mark.

The US is clearly in no position to bail out the EU or anyone else. If ordinary Americans cannot wean their government and sticky-fingered big investors from the public teat and cookie jar, and convince them that it is time to bring the age of Keynes to a close and enter a new age of fiscal reality, the future pain to be faced by those who survive will be far greater than the necessary pain of facing our accumulated problems today.


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Blogger gtg723y said...

While I am no fan of a lost decade or two I like to think of it like the Dark Ages, or the Golden path for those who are familiar with Dune. After a period of stagnation there is a rebirth of science and innovation, then it get corrupted with politics and we have another period of stagnation. Just like the seasons of the year. Some might wish for the perennial summer of the tropics, but without the winter to cull the herd we would just stagnate like the people living in tropical regions.

Monday, 06 December, 2010  

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“During times of universal deceit, telling the truth becomes a revolutionary act” _George Orwell

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