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Warning, tighten your belts, America’s new Age of Austerity is already here, today. There I said it. I admit it. And you better too. Prepare now. Could be like the 1930s depression austerity. You’ve seen the warnings all across the major newspapers about a global slowdown. But why no warnings of austerity dead ahead? Why? America’s still deep in denial. We prefer happy talk to the truth. No, nobody will get honest about austerity till after the elections. Then it’ll hit hard. Wake up. You were warned: America’s new Age of Austerity is already here. Till the elections, nobody else...

If you listen to those on the political left, you will think that the ongoing meltdown in the euro zone proves that spending cuts are driving the world into another Great Depression. Paul Krugman called the fiscal retrenchment “criminal folly,” while the famous British journalist Polly Toynbee affirmed that “the great austerity experiment has failed.” Adopting this view, at their recent Camp David summit meeting, leaders of the G8 nations agreed to pursue growth and job creation ahead of deficit reduction. On the other side of the ideological divide, there are those who say that austerity did not fail, because...

Global economic recovery will be slow and bumpy over the coming years, a senior economist from Vanguard told financial services professionals in Hamilton yesterday. Speaking at the Vanguard 2012 Bermuda Investment Forum at the Fairmont Hamilton Princess, Roger Aligia-Diaz highlighted several headwinds facing the economy including the European sovereign debt crisis, high oil prices, a slowdown in China and the “fiscal cliff” facing the US at the end of this year. Although Mr Aligia-Diaz warned his audience that his message might appear depressing, the presentation was cautiously optimistic, indicating that growth was happening and was likely to continue. Vanguard, which...

Western states are no longer able to repay its debt. Overwhelmingly, the debt burden of a number of stakeholders is predicated on the existence of large-scale and long-term commitments that are at the core of the overall social contract prevalent in the Western world and beyond. The policy approaches employed thus far, whether ‘quantitative easing’ or ‘twisting’ have not helped lower the debt waters — indeed, they have made matters worse. Instead of ‘quantitative lowering’ of these waters, at least in the United States, private banks and corporations are using their excess liquidity to re-leverage at a feverish pace, thereby...

Italy's social fabric is being torn by recession and tensions are growing among its citizens, Prime Minister Mario Monti said on Sunday. Speaking to a group of students in the central Italian town of Arezzo, Monti urged Italians to stick together and "not give up" in the face of a shrinking economy and rising unemployment. Monti's technocrat government has imposed painful austerity measures since taking office last year, and in recent days ministers have responded to calls from politicians and the media to show more compassion for the plight of ordinary Italians. "The country is now marked by profound social...

Now, we all all know “austerity� from deep spending cuts (not the tax hikes, of course) is killing Europe’s economy and would do the same here in America, right?Well, here’s a story about austerity that critics such as President Obama, Paul Krugman, and Ezra Klein never seem to mention: From 1944 to 1948, Uncle Sam cut spending by a whopping 75% as World War II came to end. Spending as a share of GDP plunged to 9% in 1948 from 44% in 1944.Superstar economist and devout Keynesian Paul Samuelson—later to become the first American to win the Nobel Prize in...

Last Sunday, Greece and France held national elections. Both would determine the countries’ future fiscal course of action. In Greece, voters rejected the two ruling parties that had voiced support for the European Union austerity program. That program was instituted in an effort to keep the EU solvent after Portugal, Ireland, Greece and Spain, known as the PIGS, incurred massive debt as the result of their “cradle to grave” social programs. Since Greece was one of the EU’s original “problem children,” this could probably have been expected. In France, socialist Francois Hollande was ushered in, while right-of-center Nikolas Sarkozy was...

In the wake of French and Greek elections last weekend, the backlash against European austerity is now in full swing. Meanwhile, in the U.S., advocates of big government are insisting that the European debacle proves we must reverse our efforts to reduce debt and deficits. After all, Paul Krugman writes in the New York Times, “claims that slashing government spending would somehow encourage consumers and businesses to spend more have been overwhelmingly refuted by the experience of the past two years.” Given Europe’s continued slow growth, Professor Krugman might have an argument to make — if there actually had been...

Denial is leading to collective economic suicide in Europe and the United States. The French on Sunday elected a socialist president who wants to raise taxes on those elusive rich and keep spending as if there is no tomorrow. Many on the left, including European socialists, the New York Times and its economist Paul Krugman, are falsely claiming that Europe and even the United States are being saddled with austerity. Their claim is that governments are not spending enough to reduce unemployment. They want higher taxes on the most productive plus bigger government. They suffer from a collective memory loss....

Greek Conservatives failed to cobble together a coalition on Monday (7 May), with leftist leader Alexis Tsipras set to try and form a government opposing the "barbaric" bailout, a move that would put into question the country's future in the eurozone. "I tried to find a solution for a government of national salvation, with two aims: for the country to remain in the euro and to change the policy of the bailout by renegotiation," Conservative leader Antonis Samaras said in a televised address on Monday. "We directed our proposal to all the parties that could have participated in such an...

The French are revolting. The Greeks, too. And it’s about time. Both countries held elections Sunday that were in effect referendums on the current European economic strategy, and in both countries voters turned two thumbs down. It’s far from clear how soon the votes will lead to changes in actual policy, but time is clearly running out for the strategy of recovery through austerity — and that’s a good thing. Needless to say, that’s not what you heard from the usual suspects in the run-up to the elections. It was actually kind of funny to see the apostles of orthodoxy...

Austerity is destroying Europe, we are told. In fact, this “anti-austerity� slogan was a big reason for the victory of newly elected socialist François Hollande to the presidency of France. Interviewed in The Economist a few weeks ago, Hollande’s campaign director said “We are not disciples of savage spending cuts.�But then, I look at the data and I am asking: What “savage� spending cuts?Look at this chart. It is based on Eurostat data which you can find here. Following years of large spending increases, Spain, the United Kingdom, France, and Greece — countries widely cited for adopting austerity measures...

Other than the stock market crash of 1987, which was seen at the time as the harbinger of another great depression, the worst was avoided due to excellent Federal Reserve policies directed specifically at market psychology. The effectiveness of the Fed aside, it should be noted that the short and medium cycles did not coincide during that period. After the mid-point of the decade of 2000, they did, so that a long-wave theorist could hypothesize that the collapse phase of the long wave was delayed by about a decade, when the three cycles did, in fact, coincide. The confluence of...

The mainstream media will attempt to spin French President Nicholas Sarkozy's loss today to Socialist challenger François Hollande as a rejection of "austerity" policies--and to urge American voters to reject the deficit-cutting politics of the Tea Party when we go to the polls in November. In fact, there are important lessons from France--and they are the precise opposite of what the media is telling us. First, to call Sarkozy's policies "austerity" is to insult both austerity and socialism. The French government--like other European governments--sought to close its budget gap primarily by raising taxes, not by cutting the size and cost...

In recent days, New York Times economist Paul Krugman has been doing a whole bunch of interviews in which he has declared that the solution to our economic problems is very easy. Krugman says that all we need to do to get the global economy going again is for the governments of the world to start spending a lot more money. Krugman believes that austerity is only going to cause the economies of the industrialized world to slow down even further and therefore he says that it is the wrong approach. And you know what? Krugman is partly right...

What Is The Consequence Of Printing Money That Nobody Wants? (Lock Your Door) by Simon Black April 30, 2012 London, England [Editor's note: Tim Price, a frequent Sovereign Man contributor and Director of Investment at PFP Wealth Management in London, is filling in for Simon today.] In a week that saw Britain slide into its first double-dip recession since 1975, we quite fittingly also saw evidence of the sort of insular bigotry and protectionist narrow-mindedness that one associates with that same ugly, painful decade, when Barry Sheerman, Member of Parliament, said: “I’m getting increasingly worried about the free movement of...

Spain will restore border controls to France on Saturday, during a summit of European Central Bank (ECB) to be held on 3 May in Barcelona, said Monday the Ministry of Interior. The measure, which will run until next May 4, will involve the temporary suspension of the Schengen Agreement on free movement of citizens among the 27 European Union countries. According to the conservative government of Mariano Rajoy, the land boundaries with France will be reinforced at the border of La Jonquera, Port Bou, Puigcerdá, Camprodon, Les and Canfranc and air borders of Girona and Barcelona airports. The Schengen Agreement...

Until now, Polyzonis's self-immolation was the most vivid image of a singular public act of protest in a country that's been shaken by anti-austerity violence. But Greece was jolted even more Wednesday after a 77-year-old man took his own life in the busy Syntagma Square, central Athens, the scene of several violent clashes between anti-austerity protesters and the police in recent months. Just a few hundred yards away from the Greek Parliament, retired pharmacist Dimitris Christoulas shot himself with a handgun amid the morning rush hour, in what was apparently a protest over the financial crisis gripping the nation… Christoulas's...

European Parliament, Strasbourg, 13 March 2012 (YouTube video)

WASHINGTON (AP) — Most people like President Barack Obama's proposal to make millionaires pay a significant share of their incomes in taxes. Yet they'd still rather cut spending than boost taxes to balance the federal budget, an Associated Press-GfK poll shows, giving Republicans an edge over Democrats in their core ideological dispute over the nation's fiscal ills. The survey suggests that while Obama's election-year tax plan targeting people making at least $1 million a year has won broad support, it has done little to shift people's basic views in the long-running partisan war over how best to tame budget deficits...

Greece: once the origin of Western civilization. Now, a burned-down debt penal colony owned by Goldman Sachs... There is a silver lining to Athens' ever uglier transition to a third world country: the massive GDP boost that awaits it as it sets off to fix broken windows and burned down buildings. In fact, we eagerly await Krugman's OpEd praising some of the more recent developments out of Greece in the past 48 hours. Granted, the country will need to get even more bailout funding from the Troika for said GDP boost to occur, but who cares about details anymore. From...

ATHENS (Reuters) - Historic cinemas, cafes and shops went up in flames in central Athens on Sunday as black-masked protesters fought Greek police outside parliament, while inside lawmakers looked set to defy the public rage by endorsing a new EU/IMF austerity deal. As parliament prepared to vote on a new 130 billion euro bailout to save Greece from a messy bankruptcy, a Reuters photographer saw the buildings engulfed in flames and huge plumes of smoke rose in the night sky. The air over Syntagma Square outside parliament was thick with tear gas as riot police fought running battles with youths...

Greece's largest police union has threatened to issue arrest warrants for officials from the country's European Union and International Monetary Fund lenders for demanding deeply unpopular austerity measures. ---------------------------------------------------------- The threat is largely symbolic since legal experts say a judge must first authorize such warrants, but it shows the depth of anger against foreign lenders who have demanded drastic wage and pension cuts in exchange for funds to keep Greece afloat. "Since you are continuing this destructive policy, we warn you that you cannot make us fight against our brothers. We refuse to stand against our parents, our brothers, our...

Despite endless talk of spending cuts and fiscal restraint in Washington over the past year, lawmakers continued to act as though the government doesn't spend nearly enough. They introduced 874 bills in the House and Senate that would have boosted annual federal spending by more than $1 trillion if they'd all been signed into law, according to an analysis done for IBD by the National Taxpayers Union Foundation. In contrast, lawmakers offered up just 215 bills to cut spending last year that would have reduced federal outlays by about half a trillion had they all been signed into law.

Given a lot of the rhetoric coming out of Washington and mainstream media outlets these days, one could be forgiven for believing that the United States has entered a new age of unprecedented austerity. This is hardly the case. Indeed, despite the best efforts of an insurgent Republican majority in the House of Representatives — elected in 2010 as a rebuke to Democratic fiscal recklessness — federal spending continues to rise.

ROME (AP) — Italy's Catholic Church has shifted gears and shown a willingness to revisit its tax-exempt status amid renewed criticism that much of its vast real estate holdings isn't subject to local property taxes. The criticism has grown recently following Premier Mario Monti's proposal to restore a property tax on first and second homes as part of his sweeping austerity measures to help reign in Italy's massive debt. With ordinary Italians being asked to make sacrifices, the church is coming under fire to do its part and give up what some consider an unfair privilege. Critics, most prominently Italy's...

Hopes that a reluctant European Central Bank will ultimately take up its "bazooka" and agree to massive sovereign bond buying have helped keep the euro zone debt crisis from a full meltdown. But such bold action would only prevent a sudden collapse. Years of managing market expectations and fears would follow, along with long-term painful austerity measures and other reforms to keep countries on the path to fiscal discipline.

Public services are to be paralyzed again on Thursday as thousands of workers walk off the job to protest an ongoing austerity drive in the seventh general strike this year. As usual, tax offices, courts and schools will shut down, hospitals will operate on emergency staff and customs officials will walk off the job. The national rail network will suspend operations all day as will the Proastiakos suburban railway service. Ferries too will remain moored in port as seamen join the 24-hour walkout. Flights are unlikely to be heavily disrupted.

To get to city hall, you drive up I-75, past the empty Silverdome where the Detroit Lions used to play, and into a nondescript concrete municipal building. The city clerk was laid off a few days ago, but the door to her office hangs open. The mayor, Leon Jukowski, gives me a brief tour of the desks where people no longer work. Cubicles sit empty, little tchotkes and calendars left behind when their owners were laid off. “At one time we had 800, 900 city employees,” says Jukowski. “We have 150 now. And we have the same services that we...

Spain's right stormed to a landslide election victory Sunday, an exit poll said, as voters toppled yet another eurozone government engulfed in a deepening debt crisis. Bowed by a 21.5 percent jobless rate, a stalled economy and spending cuts, the 36 million-strong electorate ended the Socialists' seven-year rule with a shattering defeat, the exit poll showed. Opposition leader Mariano Rajoy's Popular Party took an absolute majority of between 181 and 185 seats in the 350-member Congress of Deputies, said projections based on an exit poll by public broadcaster RTVE. The ruling Socialist party PSOE won between 115 and 119 seats,...

France cuts frantically as Italy nears debt spiral France has unveiled the toughest austerity measures since World War Two despite the looming danger of a double-dip recession, vowing to slash borrowing by €65bn over the next five years in a last-ditch effort to save the country's AAA rating. By Ambrose Evans-Pritchard, International business editor 9:23PM GMT 07 Nov 2011 "We wish to protect the French against the grave problems facing other European countries. Bankruptcy is not an abstract word," said premier Francois Fillon. The belt-tightening plan -- the second package since August, taking total cuts to €112bn -- include a...

Greeks have launched a wave of civil disobedience against the embattled government's austerity measures designed to appease international creditors, which provided rescue loans to the country. The latest example of rebellion is the Athens municipality of Nea Ionia, where authorities are urging people not to pay a much reviled new property tax being charged through electricity bills. "Our constituents can't pay, they don't have the ability to," Nea Ionia mayor Iraklis Gotsis said. "We consider the new tax to be illegal. But in essence, the truth is our people just can't pay."

Monetary contraction in Portugal has intensified at an alarming pace and is mimicking the pattern seen in Greece before its economy spiralled out of control, raising concerns that the EU summit deal may soon washed over by fast-moving events. Data released by the European Central Bank show that real M1 deposits in Portugal have fallen at an annualised rate of 21pc over the last six months, buckling violently in September. Data released by the European Central Bank show that real M1 deposits in Portugal have fallen at an annualised rate of 21pc over the past six months, buckling violently in...

The parliament approved a painful set of austerity measures on Thursday, defying violent protests in central Athens and a general strike which shut down much of the country. The government won the parliamentary vote with 154 votes in favor and 144 against, despite the decision by one deputy in the ruling party to oppose one article in the package. The victory should ensure the European Union and International Monetary Fund release a vital 8 billion euro loan tranche which the government needs to keep paying its bills past November. The mix of deep pay and pension cuts, tax hikes and...

ROBERT REICH: The Republican Economic Plan Is An Austerity Death-Trap Robert Reich Oct. 19, 2011, 6:25 PM Ron Paul’s newly-unveiled economic plan – promising to cut $1 trillion from the federal budget in year one (presumably that means 2013) – is only slightly more ambitious than what we’re hearing from other Republican candidates. They’re all calling for major spending cuts starting fifteen months from now. What are they smoking? Can we just put ideology aside for a moment and be clear about the facts? Consumer spending (70 percent of the economy) is flat or dropping because consumers are losing their...

When Republicans took control of the House in January, they pledged to make deep cuts in federal spending, and in April they succeeded in passing a bill advertised as cutting $38 billion from fiscal 2011's budget. Then in August, they pushed for a deal to cut an additional $2.4 trillion over the next decade. Some analysts have blamed these spending cuts for this year's economic slowdown. But data released by the Treasury Department on Friday show that, so far, there haven't been any spending cuts at all. Higher Spending, DeficitsIn fact, in the first nine months of this year, federal...

Stocks tank as Greece admits it won't hit targets Stocks tank as Greece admits it won't hit deficit-reduction targets AP Business Writer, On Monday October 3, 2011, 7:15 am LONDON (AP) -- Stocks took another battering Monday after Greece admitted it won't meet its deficit reduction targets, raising renewed fears that the country will not get crucial bailout loans it needs to avoid a default.

As the headlines of Greek tragedy and Italian farce continue, one solid national performance has been largely overlooked. And that’s a pity because Ireland’s relative success seems to show that there is a way out for countries like Portugal, Italy, Greece and Spain as they struggle with their debts. This is something we might expect the euro zone’s leaders to be trumpeting whenever they can. Of course, like Greece and Portugal, Ireland’s economy was bailed out, back in 2010, and had to promise some pretty harsh austerity to get its cash. But now, while Greek five-year credit default swaps are...

Doctors used to believe that by draining a patient’s blood they could purge the evil “humors” that were thought to cause disease. In reality, of course, all their bloodletting did was make the patient weaker, and more likely to succumb. Fortunately, physicians no longer believe that bleeding the sick will make them healthy. Unfortunately, many of the makers of economic policy still do. And economic bloodletting isn’t just inflicting vast pain; it’s starting to undermine our long-run growth prospects. Some background: For the past year and a half, policy discourse in both Europe and the United States has been dominated...

The decline of London, Berlin and Europe-wide stock indices by at least two per cent each on Monday morning, along with the fall of the euro to a 10-year low against the yen and a seven-month trough against the U.S. dollar, came as no surprise to Europeans who watched the battle between Berlin and Athens over the Greek debt crisis go ballistic over the weekend. Greece, pushed to the wall by a sequence of German-led bailouts that have done little more than pile on more debt, announced on Monday that it is nearly out of cash. Deputy Finance Minister Filippos...

After Berlusconi was scolded by everyone, but most importantly by backstop solvency provider ECB, for his bull in a China shop maneuver of the first, now defunct, Italian Austerity plan, here are the details from the next, soon to be gutted "Austerity", which readers may be forgiven, if they take it with just a grain of salt. According to Bloomberg, the details are as follows: Plan to to include higher retirement age for women from 2014To add 3% tax on income over 500k eurosItaly to approve constitutional law for budget balance SeptTo increase VAT from 20% to 21%. Will...

“The austerity plan is in chaos. It is time to go back to the drawing board” remarks La Repubblica in its report on the measures announced less than a month ago by the Italian government. As the daily points out, at the time Italy was the target of speculative attacks on the sovereign debt market which threatened to scupper the euro if nothing was done to quickly reassure investors. However the plan that was supposed to rein in Italian debt (which is the second highest in the world when evaluated on the basis of a percentage of GDP) within reasonable...

In the debate over the effects of fiscal austerity on growth, all sides can point to examples that seem to help their case. Those who argue that deficit reduction can help growth can point to the Baltic states who pushed through even tougher measures than for example Greece and Portugal, and who are now booming, with Estonia seeing GDP increase 8.4% compared to a year earlier, Lithuania 6.1% and Latvia 5.3%. On the other hand we can see that growth in for example Britain and Portugal has slowed considerably, and in Greece we have seen a 6.9% contraction the latest...

In one of those lapses of news judgment that with regrettable frequency make mainstream journalists resemble characters in Scoop, the media herd that gathered in Wisconsin to chronicle the great Democratic triumph in the state senate elections has gone back to the coasts — and missed what could grow into a much more consequential story than the failure of organized labor’s second attempt to punish the Wisconsin GOP: the outbreak of racial hate violence at the Wisconsin State Fair. A story that involved Scott Walker getting his just deserts, even if it didn’t quite work out that way, was infinitely...

The Biggest Lie Being Told About The US Economy Joe Weisenthal Aug. 14, 2011, 6:14 AM The latest piece from John Mauldin contains a nugget on US fiscal policy that's worth addressing: The economy is getting weaker. What can we do? The short answer is, sadly, not much. There were some in Maine who argued for more fiscal stimulus, but I think there is little political will for another major stimulus program. The last one got us up to 3% GDP growth before we fell back, and all we got was a major debt bill and a higher level of...

The Great Recession gave birth to a lost generation across the world, where youth unemployment rates stretch into the 20s, 30s and even 40s. Those millions have responded with violence. The riots and fires consuming London are a story about senseless violence and crime. They are also a story about urban politics, race relations, education inequality, and British culture and society. But underneath all of that, they are part of an economic story that is universal. For the last year, Great Britain has embraced austerity to a degree that would make some American conservatives blush. The purpose of shrinking government...

Liberal organizations and unions are frustrated that President Obama has not aggressively pushed a new jobs stimulus agenda, and they are offering up a consolidated fall agenda for Democrats to embrace as an alternative to austerity. Representatives of MoveOn.org, Rebuild the Dream and the Center for Economic Policy and Research joined Rep. Jan Schakowsky (D-Ill.) on Tuesday to launch a progressive “Contract for the American Dream” to urge the administration and Congress to turn away from budget cutting and focus on job creation.

<p>The protests have now spread to other cities, with violence reported in parts of Birmingham, Liverpool and Bristol.</p> <p>Great Britain and other parts of the world are experiencing unrest at a time of global economic uncertainty and stock market volatility.</p>

Via the Standard, the scoop on West comes from Cox Radio reporter Jamie Dupree. West himself weighed in on Twitter: I will support the new debt deal- it has enough of what I need including no tax hikes, spending caps and a step toward a balanced budget.US Senate has no credibility. Sen Reid has had 815 days to produce a budget- nothing & now he wants to produce a debt plan. Zero credibility Big news, needless to say. West’s support gives Boehner’s plan instant grassroots cred and therefore political cover for other tea-party freshmen to grudgingly support it, which is...

Watch Out, Italy Is Really Going To Crap Right Now Joe Weisenthal Jul. 8, 2011, 6:19 AM Sorry, need to break in with another Italy update. We mentioned earlier, when stocks were more flat, that Italy was the one laggard. Now it's a mega-laggard. Let's update: The main FTSE MIB index is off 2.2%. Unicredit is off 5.6! Update: The stock is halted! Italian short-term yields are now surging. Remember, if this blows, then it will make the Greek debt crisis look like child's play, as this chart easily shows. So what's going on? The country is now trying to...