American debt, Austerity, Debt crisis, European debt crisis, European politics, Gradus di, Greek crisis, inflation risks, M Hollande, Mrs Merkel, obama, Romney, Sarkozy, Tsiolkovsky, Tsiolkovsky tower, US Debt, US Economics, US Election
Austerity has a warm feeling of self sufficient individualism, a certain manly rugged attraction. Pay only for what you can afford. Borrow nothing, lend nothing. Hair shirts and personal resilience.
So it has been an interesting week in European politics. France’s conservative Sarkozy lost to M. Hollande, a left of centre politician, and after bloodshed and riots in the street, mounting unemployment and civic collapse, Greece too voted against austerity. All across Europe voters have consistently thrown out government after government that has been in power through the Great Recession rejecting, at every turn, austerity.
Gone are Silvio Berluisconi of Italy, Papandreou of Greece, Rodriguez of Spain, Brown of Britain, Cowan of Ireland, Socrates of Portugal and so on.
Doubtless, to Americans, these collapses seem a distant noise, strange foreign side shows irrelevant to their own election. Perhaps, but I feel there is much here that party bosses in the United States will be paying very close attention to.
The election results in Europe are the fruit of the economic argument that Romney and Obama are engaged in. We know Europe is important because Mr Romney says it is. Romney has been playing the European card throughout the primaries. Back in Iowa he proclaimed that “I think President Obama wants to make us a European-style welfare state,”. He continued “What I know is that, if they do that, they’ll substitute envy for ambition. And they’ll poison the very spirit of America and keep us from being one nation under God.”
Romney warns that Obama’s economic policies are “making us more and more like Europe. I don’t think Europe is working in Europe. I don’t want Europe here.”
The problem for Romney, and the Republicans, is that far from Europe being like Obama, Europe has been following policies of austerity far closer to those espoused by Republicans than Obama’s. And in Europe they have caused political disaster for all political parties that have touched them. Obama’s interventionist America at least, has falling unemployment, at around 8-9%. Spain’s is standing at nearly a quarter of all youths under 25 years old. Obama has even tackled gas prices. There is growth in the USA, albeit thin and stunted, but it’s there nonetheless. Britain, in contrast, is an enthusiastic proponent of reducing the debt first, and bringing in austerity up-front, both good solid Republican virtues, which has in two years turned rising growth and increasing employment into recession, stagnation and unemployment.
The irony is that a lot of Europeans still see the economic woes of the world as the fault of America, and those who shout the loudest for austerity as being American influenced. They fail to recognise the efforts and methods of Obama. Hence the interesting carnival float shown at the top of the post with Uncle Sam squeezing Angela Merkel, the uber supporter of “Austerity”, out of his bottom.
Down in Charlotte, North Carolina, Romney joked that, at this year’s Democratic convention, “You’re not going to see President Obama standing alongside Greek columns. He’s not going to want to remind anyone of Greece, because he’s put us on a road to become more like Greece”. If anyone will put the USA in a position like Greece or France it will be the Republicans.
The problem is that Republicans would give further tax breaks to the rich, who do not pay their proper share of taxes anyway, and further squeeze the middle classes, their pensions and their wages, whilst slipping in all manner of stealth taxes and increases in fees and charges. The lesson of Europe would tell us that this would be a disaster. Austerity will not work politically.
As always it’s the economy.
But! I hear you cry, what about the debt, surely all this means that the profligate worthless Obama is simply putting off the evil day, because at some point the massive all American 100% of GDP, $15 Trillion debt has to be paid off.
Well darling, what do you think a second term is for? Second terms, where you cannot be voted out because they are your last, are always the more interesting and Obama’s next term is going to be the most interesting second term since Nixon. Because? Because it’s where Obama gets rid of the debt, and you end up working ’til you’re seventy.
Traditionally America gets rid of it’s debt by some very unpleasant methods. These include devaluation, already well underway with the dollar worth 25% less than it was at the start of the crisis. Then there is the simple expedient of printing money which is every bit as appalling as it sounds, so we will just call that Quantative Easing then. This inflates the economy and reduces your pension, lowers your take-home pay in real terms, deflates your house value and when Inflation kicks in, increases your mortgage, food, gas prices, etc. Inflation is a great idea too because it reduces foreign debt. Like, say, China’s huge holdings. A wonderful game called beggar your creditors. All of which may bankrupt those individuals who are already underwater. But hey, by the time that happens Obama is back in the White House and it’s game over.
Unless that is, you do something really interesting. Something to make your mark on world history, something so astonishingly audacious that it could only be done by an American. Something wonderful.
What we need is growth. But to sell it, the growth cannot be confined to America alone; it must be World-wide growth. It has to be inclusive for the whole family of man. Work for every nation so every nation can produce and buy and turn the rubbish money good. But, the last time we did world wide growth like this we were arming a world war.
What we need is another world wide project everyone can contribute to but without the downside of all that death and destruction. America needs to improve it’s skills base, it’s research and it’s manufacturing. It needs something it can lead with. Something so huge that only all the world could make, and something with the wow factor. Something the world can believe in.
Something that would inspire and give hope.
A Tsiolkovsky bridge. An elevator to the stars. Jacob’s ladder to the heavens. The Gradus di, A lift to the final frontier. What could be more American? (We’ll just ignore that Tsiolkovsky was Russian for the moment). When would the times be better?
Beats the hell out of hyper-inflation? That and you get the Trekkies on-side, what’s not to like?
Copyright David Macadam 2012