Day: August 17, 2010

Germany: Miracle On Life Support

College of Political Knowledge

International Studies Group

European Desk

Last Friday, Aug.13, 2010…the economic news brought us a good picture of Germany and Europe…all the economic pundits on the airwaves were jumping and jerking off at the news that the economy in Germany rose by 2.2 percent, which helped the EU rise by 1%….all in all good news right?

I got to think about the US and all the “good” news in the US….that about earnings and growth and……I just had to do some research on what was really happening in Germany…..

The German figures have been greeted with euphoria and self-congratulatory pronouncements by bankers, government officials and sections of the German media, but as Financial Times columnist Wolfgang Münchau pointed out recently, the German economic recovery is more “mirage” than “miracle.”

Germany was able to regain some economic ground in the early part of this year due to stimulus subsidies made available to employers by the government. But as is the case in France and many other European countries, these subsidies, such as short-time working, have largely come to an end.

Germany’s export industry also benefited in recent months from the fall in the value of the euro, which at one point declined to near 1.20 per dollar. In recent weeks, however, with concern growing over the prospects for the US economy, the euro has risen toward the 1.30 per dollar mark. The strengthened euro makes German exports less attractive on world markets.

The strength of the German economy is also its Achilles heel. Germany’s relatively expensive exports can find buyers only under conditions of expanding markets. But urged on by the German government, one European nation after another has introduced drastic austerity programs, which will inevitably depress economies and choke off consumer demand, with far-reaching longer term implications for German exports.

Recently, the US was lectured by the EU, at least some in the EU, to get our run away spending in check or we could suffer the same as Greece….there has even been some US pundits that has said similar stuff….the truth is….that most of Europe would just sh*t if the US stopped spending….the rest of the damn world dependsw on the spending habits of the US, both private and public.

In other words….Germany’s miracle on the economic front is NOT such a miracle.  Makes good copy and makes good fodder for some politicos but in reality…… Germany needs the US to continue spending and spending…if the US becomes serious about its deficit then the rest of the world go into the crapper….what to do?….what to do?

To Cut The Deficit In Half!

College of Political Knowledge

Federal Budget Deficit 2010

And the beat goes on….the beat is the rhetoric of the Federal budget deficit and who is good and who is bad…..so far the Repubs say they are good and the Dems are bad…..they have their ideas and most of them involve the livelihood of working stiffs….why is that?  Why is the sacrifice of the working people the only answer that the Repubs seem to have?

Let us be honest……the deficit war cries are nothing but political posturing….after all …it is an election year.  So thanks to the election we have just a wealth of BS rolling off the lips of pundits and politicians alike…..one of my favs is that the deficit can be cut in half by 2020…and the GOP plan is such….thanx to the mind of Rep. Paul Ryan….But the figure that they use assumes that nothing will change in the economic sector….that all variables will remain as they are today or whenever they make these types of statements……….the truth is that it is a LIE……the sector is in constant flux!

— Leaves in place the current Social Security and Medicare system for people 55 and over.

— For those currently under 55, it would reform Medicare with vouchers that seniors would use to buy private insurance. The vouchers would grow more slowly than the projected increase in medical costs, but Ryan argues that competition would keep plans affordable. The age for Medicare eligibility would increase over time from 65 to 69.  (this helps NO one but insurance companies and their affiliates)

— Future Social Security benefits would be reduced for many workers now 54 or younger. They would also have the option of putting into investment accounts some money they would pay in Social Security taxes.  (this could set up making the people that retire with SS as the second class citizens by forcing them further into poverty)

— Gradually raises the retirement age to 70.  (here a great plan!  Force working people to work until them die…would save on resources)

— Eliminates taxes on interest, capital gains and dividends.  (Who in the Hell does this help?  Not the people that have low wage jobs their whole life)

— Replaces taxes on corporations with a consumption tax on what businesses buy.  (In otherwords if they buy nothing in a year then they have to pay NO tax…can humans get this deal?)

— Would freeze increases on most spending by the government but would exempt such programs as Social Security, Medicare and Medicaid, as well as defense spending.  (With SS, Medicare and defense exempt….what is real left to cut?)

There you have their plan, the GOP that is….a what a good deal it would be for most Americans who depend on SS for their retirement (that is sarcasm in case you missed it)…..

But the GOP wants to cut the deficit in half….but that would still be a trillion dollars or more left behind and what if there is another national disaster?  Do we ignore the suffering of Americans just to keep the fat cats in their cigars and martinis?

Also keep in mind that the Debt and the Deficit are not necessarily the same thing…………..

The National Debt is the total amount of money owed by the government; the federal budget deficit is the yearly amount by which spending exceeds revenue. Add up all the deficits (and subtract those few budget surpluses we’ve had) for the past 200+ years and you’ll get the current National Debt.

Politicians love to crow “The deficit is down! The deficit is down!” like it’s a great accomplishment. Don’t be fooled. Reducing the deficit just means we’re adding less to the Debt this year than we did last year. Big deal — we’re still adding to the Debt.

So go ahead a cut the the deficit in half, if you can…but remember the DEBT REMAINS!

This is typical supply side rhetoric….you can cut the deficit but what about the national debt?  No, Irene they are NOT the same thing!