We’re going to cut those deficits… As soon as we’re done spending more money!
That’s the conclusion of the G20 summit this weekend as the official statement says:
While growth is returning, the recovery is uneven and fragile, unemployment in many countries remains at unacceptable levels and the social impact of the crisis is still widely felt. Strengtheining the recovery is key. To sustain recovery, we need to follow through on delivering existing stimulus plans, while working to create the conditions for robust private demand. At the same time, recent events highlight the importance of sustainable public financies and the need for our countries to put in place credible, properly phased and growth-friendly plans to deliver fiscal sustainability, differentiated for and tailored to national circumstances.
Those countries with serious fiscal challenges need to accelerate the pace of consolidation. This should be combined with efforts to rebalance global demand to help ensure global growth continues on a sustainable path. Further progress is also required on financial repair and reform to increase the transparency and strengthen the balance sheets of our financial institutions, and support credit availability and rapid growth, including in the real economy. We took new steps to build a better regulated and more resilient financial system that serves the needs of our citizens. There is also a pressing need to complete the reforms of the international financial institutions.
There’s 26 pages of this nonsense but the gist of it is: We promise to keep bailing out the economies but as soon as that’s done then we are right on top of this deficit thing. Of course, the underlying assumption there is that the bailouts are working in the first place – something that is difficult to convince the World’s 500M unemployed workers, who would rather have jobs than a robust banking system. From a global perspective, our short-term outlook is less than robust so far:
We did a nice global economic overview on the weekend where we explored the austerity alternative to our previous assumption that the US will ultimately choose either “Default or Hyperinflation” and, after a raucous discussion in our Member Chat with good points being made on both sides of the aisle (the right side and the wrong one) – I will have to stand by my original conclusion that you will NEVER get this country to agree to go the austerity rout in any meaningful way so it looks like it’s Hyperinflation or, literelly, bust…
I don’t mind inflation as long as…
