Where is the US economy headed?

'US politicians are scared of OWS protests?'

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@georgeob1,

Quote:

Greece and other member states apparently took this as a green light to abandon financial prudence entirely and, aided by some budgetary fraud, their left wing governments began a series of chronic deficits with successive government giveaways designed to curry favor with parts of the electorate to keep themselves in power.

The Der Spiegel piece asserts that it was well known that the Greeks had a history of dishonesty and of lack of standards, but the assumption was that the EU vouching for them and watching over them meant that they had changed....NOT!..Unbelievably the European leaders were more interested in the utopia building plans than they were in what the truth was, so they accepted the Greek lies as truth for expediency (a global epidemic at this point) and carried on for as long as they could get away with it.

Is it any wonder that the markets dont trust the European leadership anymore?? I think they are being extremely rational here..."fool me once shame on you, fool me twice shame on me" is in force.

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@hawkeye10,

Closely related is the current view that the Euro was more a Utopia building tool than it was a prudent financial system instrument....which if true obliterates EU leadership credibility. By reaching too far for their dream EU leadership has cast their very legitimacy into doubt. This is more of what we see everywhere in public and in private, the adoption of the motto "go big or go home". The problem is that the leadership that is doing the gambling is doing it with lives that belong to other other people....again casting into doubt their legitimacy because they claim to be leading democracies not running fiefdoms and dictatorships. If the people are to decide then the people must have a choice, they must know the truth as best as the truth can be known, and they must choose....all of that was largely dispensed with for the sake of expediency by the EU utopia builders.

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@hawkeye10,

There is truth in what you write, but I believe it is important to also recognize the many positive accomplishments of the EU in promoting political stability and a long period of economic growth and prosperity in Europe. Governments of all kinds everywhere encounter political and economic difficulties and make their own mistakes in both areas - ours too. It's easy to criticize all of them based on a standard of imagined perfection, but a lot harder to do it compared to realistic alternatives in the same time and place. By the latter standard, I believe the EU has done very well indeed.

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@hawkeye10,

The creation of the Euro was a bad idea that got sold to countries that had no business participating in it. All it guaranteed was inflation to the level of the strongest economies in Europe; lost their ability to control inflation, and found themselves with reduced competition in the world marketplace.

When the two parties in the US is unable to find agreement on many fronts including our budget, it's almost impossible for 17 countries of the Euro to agree to the management of their currency. Maybe impossible.

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@georgeob1,

Quote:

By the latter standard, I believe the EU has done very well indeed.

Hitler was great for Germany if you take only the early years...what is built must be built on truth and the will of the people, otherwise it is a bastardization of democracy and is not sustainable. Europe was going to be fine even with out a EU for a long time because of US Superpower protection and aid, the EU was their plan to go it alone AFTER that, the EU is not responsible for post WW2 peace and prosperity ...the US is.

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@hawkeye10,

hawkeye10 wrote:

Europe was going to be fine even with out a EU for a long time because of US Superpower protection and aid, the EU was their plan to go it alone AFTER that, the EU is not responsible for post WW2 peace and prosperity ...the US is.

I agree about the several political contradictions and shortcuts taken in fostering the EU's growth. However they are in uncharted territory here and the easy alternatives that many critics imagine were not always either easy or even possible.

I think a lot of Europeans would disagree with your final conclusion. We certainly contributed to the opening of new opportunities soon after the war ended, but they did most of the work and growing themselves.

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It is certainly interesting to see people disposing of the destinies of nations in the infantile, ridiculous and inconsequential manner I am witnessing here. Perhaps it is because they believe that the "journalists" they read are some sort of superior beings when most of them got their jobs because their daddies knew somebody in the city.

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@georgeob1,

Quote:

I agree about the several political contradictions and shortcuts taken in fostering the EU's growth. However they are in uncharted territory here and the easy alternatives that many critics imagine were not always either easy or even possible.

When the scheme collapses under the weight of the contradictions and shortcuts I am sure that the explanation that doing the job right would have been harder will sooth the people * sarcasm* . If my house should fall apart and I then go to the contractor asking wtf happened to this house that he assured me was of top quality and the response is "I did not have any plans so I did the best I could" then I am not going to be very soothed....nothing takes away the lie that was told to me, the one about the house I was buying being well built by an expert, which ended up costing me.

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Seniors will see a 3.6% increase in Social Security benefits for 2012 it was announced today. First increase since 2009 and doesn't kick in until January, 2012. At the same time, they'll see an increase in Medicare premiums, effectively wiping out whatever modest increase to their monthly Social Security checks.

I think the last COLA adjustment Congress gave themselves was around $3,000/month.

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@Irishk,

They are working hard for the American People. Evil or Very Mad

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@cicerone imposter,

Well, they really do. By the end of the day, they're exhausted from naming all those buildings after themselves.

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@Irishk,

But just think of all the IRS audits and mailings they do. What will the IRS do, is the postal office closes.

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Watching CBS and Fox News last night I got the distinct impression that US drones had freed the people of Libya. Such an impression was not available on our news broadcasts.

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@georgeob1,

georgeob1 wrote:

Cycloptichorn wrote:

Cycloptichorn

Glad to see you finally recognize the problem with government-controlled quasi corporations (Fannie & Freddy) using government guarantees to get cheap credit and using the money for the wholesale purchase of mortgages and packaging them as described in the sign, for resale as securities - thereby recapitalizing an already greatly overheated market and in the process creating new moral hazards for the issuers of mortgages and risks for the financial institutions buying the securities they issued.

Of course, the truth is the exact opposite of what you write here. In FACT, mortgage-backed securities which were created by private entities (like Countrywide) were far more likely to be 'toxic' and fail than those backed by F/F. But, I suspect you knew that before you wrote.

Cycloptichorn

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@Cycloptichorn,

Kinda of funny that conservatives love to pick on Fannie and Freddie when the total banking system of the US were created by "private" citizens as part of our capitalistic society. That the government has the responsibility to "regulate" most industries - even financial ones, Fannie and Freddie got into trouble under GW Bush who pushed easy money and home-buying.

I'll betcha that many conservatives bought homes during GW Bush's tenure who shouldn't have.

So, who are we blaming here?

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Two senators, Chuck Schumer (D-New York) and Mike Lee (R-Utah), are proposing a somewhat novel idea involving reducing the inventory of unsold houses in the U.S.
The plan, as described by the BBC, would allow foreigners to get a 3-year tourist permit (but not a work permit) if they would spend $500K or more on residential property. $250K or more would have to be on a primary U.S. residence which would have to be occupied by the buyer 180 days or more a year. Any balance left over to get to the $500K would have to go into rental property. I believe the article said that the housing would have to be for existing properties. Purchases would have to paid for in cash.
Some $66B in home sales in April, 2010, were to foreigners and that has risen to $82B in March, 2011 (last available data). 31% of the properties have been in Florida followed by a lesser amount in California.
I can't find anything wrong with the concept. Perhaps I am missing something.

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@realjohnboy,

I see some advantages; a) sales of vacant homes, b) increase in property taxes, and c) upkeep of property.

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@realjohnboy,

Sounds like a Mugs Wanted scheme to me. I would strongly advise against participating in such a scheme. For $500 K I would expect citizenship.

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@cicerone imposter,

The point here is that government "regulators" and politically appointed leaders of quasi government corporations whose loans and operations are guaranteed by the public treasury are just as prone to error and the venalities of the human character as are other people. Franklin Raines, a political advisor to President Clinton was appointed, while serving the President, as Chairman of Fannie Mae. He and his successor vastly expanded Fannie Mae's securitization of mortgages issued by other banks, using capital borrowed at cheap rates under the government guarantee to buy the mortgages, packaging them into securities just meeting the minimum rating standards and made enormous (but illusory) "profits" while doing so. Raines accumulated bonuses of $65 million in a period of about seven years. It now turns out the profits were an illusion and the "corporation" lost billions -- all of which will be paid out of the public treasury and in amounts that vastly exceed the government bailouts of private banks (most of which were repaidZ).

This is an interesting story which should be read by everyone who supposes that greater government regulation is the cure for all our economic problems.

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Where is the US economy headed?

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