An economy built on sand
Don Surber blog
Every once in a while, I read something and I come to a conclusion that the author did not intend. So it is with Bruce Crumley’s piece in Time magazine: “Europe’s Debt Dilemma: Will Spending Cuts Stifle Growth?”
Whoa. Is the European economy so anemic that it can only survive on doses of overspending by its governments?
Apparently.
From Bruce Crumley:
<<< “Oh how brief was the joy. On May 10, financial markets reacted euphorically to the creation of a nearly $1 trillion fund to assist euro-zone economies imperiled by massive debt. Since then, however, bourses have seesawed between moderate losses and gains as buyers contemplate what happens next. The biggest question now being debated in capitals across the European Union: How can national governments who no longer face as great a risk of default bring their deficit and debt levels down without choking off the spending that’s fueling already feeble growth?” >>>
Bailouts, bailouts, bailouts. CEOs no longer want profits because those are taxed. Instead they seek bailouts — cash infusions from bankrupt governments.
Whee!
It is not just Europe, either.
Who would invest in such a crazy welfare state?
And yet, this addiction continues. Bruce Crumley quoted Eric Heyer, economist and deputy director at the French Economic Observatory in Paris:
<<< “You need to cut spending at the top of the economic cycle, not at the bottom — even if that’s what markets, political backers, or partner governments are all telling you to do. If you cut spending across the board before you’ve attained sufficient growth to confirm sustained recovery, you’ll sap what little expansion you do have, increase unemployment as business reacts to that, and in the end wind up with less revenue and more outlay than you saved with your cuts. The figures show we’re far from sustained recovery.” >>>
Maybe a recovery should not be the goal, but rather we should seek a cure for this malady once and for all by taking the economy off these life support systems. Short-term pain, yes, but long-term gain.
Be Reagan, not Jerry Ford.
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