Yesterday, I gave you the following for your consideration. Today, I give you my thoughts …
You kind of make light of the global debt and the solving of that problem. As many investors and citizens of the world are sitting on a powder keg, you appear to be bored with it all and seem to ‘have to write about it.’ Well, I too am bored with the continual banter from the bankers, politicians, pundits, and soothsayers, who seem to never get much right. As they ‘play around’ (Nero fiddling), the crisis is NOT being solved. The debt has gotten so enormous that it cannot be ignored. The only way it goes away is if some entities go bankrupt, lose a lot of money, and then get back to work. Then and only then will we begin to see the global economy get to a more even footing. My question is this:
What is being done to stop the spending, lower costs, and use income more wisely to pay down the debt with actual income, not printed or borrowed money and when is this going to start, or is it just going to press us into the “New Dark Ages,” where we just stop everything and a whole new order takes over? I know what it means to get to the end of the money when there is too much month left. WHERE IS THIS GOING ECONOMICALLY?
Maybe my recent words about the issues in Europe sound a bit glib, but, trust me, I believe the issues are serious and have the potential to wreck whatever semblance of global growth we now have. As to the point that the problems are “NOT” being solved, I disagree. In fact, a number of serious steps have been taken in the last two years that will lead to the only long-term solution – a United States of Europe.
Understand two things. First, the issues in Europe are huge, and the solution of greater fiscal and political integration takes time, lots of time. Second, the facts are distorted with the constant “doomsday” news from the breathless media. The reality is this – massive debt is not the critical problem. Just go back to the end of WWII and look at the absolutely massive debt of both Europe and the US, and then look at what happened in the 1950s and 1960s. There is a way to work out of the debt and into prosperity.
The problem in Europe has been ideology. Those who fervently believe that cutting budgets alone is the answer are wrong. The EU has to grow its way out of debt, and it will never do that if unemployment is rising and taxes are rising across the board. As well, those who believe that government spending alone is the answer are wrong. The solution lies in a common EU debt that is addressed with prudent stimulative measures coinciding with serious budget cutting, specifically in outlays that do nothing to further economic growth (pensions, for example). When people start working again and debt is reduced carefully, revenues will exceed expenditures in the future, thus taking care of the problem.
The politicians in Europe are finally getting it right. The latest step forward (bank access to the EMF) will do much to solidify the banking system and to further the long-term plan to integrate the EU fiscally and politically. As to the bankers, pundits, and soothsayers, I agree with you 100%. Listening to them is a mistake. Look to history and understand that fiscal issues of this magnitude take years to resolve, and they will be resolved as commerce is the heart of civilization. When commerce is not pumping enough money, those with political power will do what it takes to reinvigorate the money flow, and they will do this for two reasons – to satisfy their wealthy patrons and to stave off a popular “revolution” which threatens their own power.
Trade in the day; Invest in your life …
