Posted on 06/07/2010 11:00:04 AM PDT by blam
The G20 Has Officially Voted For Global Depression
Marshall Auerback
Jun. 7, 2010, 1:36 PM
(This guest post previously appeared at NewDeal2.0, and is co-written with Rob Parenteau)
The Communiqué of the past weekend’s G20 meeting illustrates that deficit hawks have gained ascendancy in global policy making circles. Great Depression II, here we come.
“Those countries with serious fiscal challenges need to accelerate the pace of consolidation,” the Communiqué noted. “We welcome the recent announcements by some countries to reduce their deficits in 2010 and strengthen their fiscal frameworks and institutions.”
European Central Bank President Jean-Claude Trichet said fiscal tightening in “old industrialized economies” would aid the global economic “expansion” by shoring up investor confidence. German Chancellor Angela Merkel said Germany was poised for a “decisive” round of budget cuts that would shape government policy for years to come.
Although, the global economy has revived somewhat from its post Lehman collapse, it hardly merits Trichet’s characterization of “expansion”, given prevailing double-digit unemployment across the globe. And global recovery will be severely hampered if active fiscal policy support — the kind of government stimulus required to sustain higher levels of growth and employment — is completely abandoned, as the G20 discussions suggest. The new remedy for collapsing demand is “budget consolidation” — a weasel term designed to mask more spending cuts in vital social services.
Notwithstanding the US Treasury’s attempts to mitigate the rise of hair shirt economics, the Obama Administration has contributed to this rising type of deficit reduction fanaticism through its own policy incoherence. The President and his main economic advisors — Timothy Geithner and Lawrence Summers — continue to accept the deficit hawk paradigm: they agree deficits are ‘bad’ in the long term. But they argue for the necessity of tax cuts and higher government
[snip]
(Excerpt) Read more at businessinsider.com ...
You can only borrow so much until there is no one willing/able to lend.
I see. Well, these meatheads are just as big idiots as our meatheads are. They have no idea what they’re talking about. If they did, none of this would be a problem.
The G20? I think it’s a car made by Infinity.
“You can only borrow so much until there is no one willing/able to lend.”
They are just printing and loaning to each other and can do this for quite a while.
BS Headline.
We’re headed there anyway.
Not really, that would last maybe weeks, but not longer than that.
I’m not real sure what this writer is complaining about/complimenting about: Is he complaining that certain European countries ARE (trying) to reduce deficits and restrict spending while Washington (Obama) is only talking about spending less in some undefined future budget, or is he complaining that the Europe MIGHT begin restricting deficit spending and complaining that Obama is NOT spending enough?
Great. Now Obama will undoubtedly blame G20 for the double-dip recession instead of his own incompetent performance as president.
They can toss out labels like “Depression” all day long, but the global economy has to eventually contract to account for a loss of 50% of all credit availability and to take into account the loss of some 35% of all global wealth since 2006.
Of course, governments can act like Japan has been doing every day since 1989 if they want to delay the eventual global recovery, but such behavior will merely slow the economy (pain of correction).
Less money available to grow into capital investments.
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Hmmm....Commodities prices coulkd sore though....Especially Gold, silver, precious metals....
All part of the master plan.
They have to. There is no way they can keep the party going because interest rates are getting too high for them to roll over the debt and service it.
Have to pay now, or pay later.
YEah, tell me how falling prices is a bad thing for the solvent person?
This is from a lefty blog for Keynesians, Robert Reich fans and Paul Krugman groupies. Their big fear is that the Tea Parties are going to result in fiscal Conservatives coming to power and putting an end to their “stimulative” spending.
Ouch! They should be cutting government spending, not raising taxes.
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