G-8 meets at Camp David
In a move that should surprise no one, President Obama sides with the new French President and against Germany’s Merkel in the debate about the balance of growth vs. austerity for Europe.
British PM Cameron added that:
…he detected a “growing sense of urgency that action needs to be taken” on the euro zone crisis.
“Contingency plans need to be put in place and the strengthening of banks, governance, firewalls – all of those things need to take place very fast,” he told reporters.
What do you bet that action won’t be taken all that fast?
A false dichotomy, the way they frame it; the discussion is all from their govenment-centric perspective. By “growth,” they mean bigger government and more spending. By “austerity,” they mean less government spending, but no changes in the underlying structures and regulations. But less government spending and restructured government would give you more growth and less austerity for individuals. Don’t think this is on their agenda…
Y’know, I find I *HATE* the bureaucrat-ese passive voice anymore…
“Action must be taken!” “Attention must be paid!” “Solutions must be found!”
But who, exactly, is going to do what, exactly? And which specific problems are going to be solved by the next “bold new action” (which typically requires dumping $-hundreds-of-millions-$ of Other People’s Money into unaccountable bureaucracies)? Hey, “World Leaders”: what benchmarks/ metrics will you set so that those-of-us-whose-money-you-squander can measure how effective your money-dump solution is?
[I am oh-so-close to “Dammit kill them all”; where’s that blood-pressure medication..?]
These Leader to Leader exhortations have been voiced in the EU for some two years now, and Baraq has joined the throng, to exactly what effect? “Something must be done”, “Soon”, but always by the other Leaders.
The European monetary union is doomed. There is no way out. None. But the Leaders all want someone else to take the high-dive first. A grotesque house of cards, but the too-big-to-fail US banks hold about $1 trillion of Euro govt bonds….
Gun ownership in the EEU countries is frowned upon, A-Mouse! The American question is whether the military and police would turn their weapons on rebellious clingers.
It makes perfect sense, doesn’t it? The Bama loathes Bibi Netanyahu, was never comfortable with the tough Frog conservative Sakozy and feels trusting of Mevedev, but not PM Cameron the Tory PM of the UK. See some…errrrr….commonality here?
Bet that Obama didn’t get very good grades in arithmetic.
What will be done is more can kicking, more inflation, bigger government, more monetizing, bigger bank bailouts, a smaller private sector, debt piled to the moon, and lots of chattering before the microphones as they pretend to be serious about solving the problems they have helped create.
“Bet that Obama didn’t get very good grades in arithmetic.”
I guessing a C- average in everything. Why else would the smartest man in the world refuse to release his transcripts?
Yep, Parker, much like the oafish John Kerry not allowing his army record of(cough)heroics displayed. Dan Rather…Ohhhhh, Dan…
These people will spend until there are no two stones upon each other, count on it. The only real question has been how long they could hold off the inevitable.
Here’s a column from LA Times that helps clarify why Hollande’s goals (and Obama’s) as far as getting growth going by government spending are not attainable.
http://www.latimes.com/news/opinion/commentary/la-oe-derugy-austerity-gets-bad-rap-20120517,0,1723259.story
The difference between the two approaches not really explained in the column is that the Inflationists believe that spending can create economic value and in their minds therefore if the private sector spending drops off – e.g. in the aftermath of a credit bubble popping- then the government should step in and spend money in substitute to keep the economy going. They invented the GDP metric which counts money spent in the private sector equally with any money spent by the government. And therefore if the government prints money and/or borrows money and spends it that will pump up the GDP numbers.
The other approach believes that economic value is created on the private side thru a market process deciding what investments are valued by consumers – those which survive profitably – and those which are not – those that fail/go bankrupt.
When the government spends it is primarily guided by politics however good the intentions of the decision makers and is cut off from the market process leading to depressed real economic growth the more reliance on government spending.
This means that the Inflationists get boxed into a corner in which they believe they can’t let government spending drop or the economy will fail. If this means more borrowing and more taxes then so be it. A vicious circle ensues – i.e. a depression. A depression as in the 1930’s happens not because the market fails but because government has gotten big enough and involved enough (e.g. via supporting unions) to step in and stop market forces from working.
The truth based on so many historical examples is that the economy cannot really recover until real steep cuts in government spending are undertaken. And the best are government bureaucrats – terminate them, cut their salaries, benefits, pensions and their activities which usually involve interfering with people in the private sector who are actually creating real economic growth.
Once more resources are left with the private sector people there will redeploy them in ways that have some chance of creating real growth – there’s no guarantee as it’s an ongoing process of trial and error – over time as successful activities survive are amplified and grow.
Beyond certain minimal levels government depresses real growth.
Step-wise, Europe is destined to nationalize all of their banks.
Spain has already taken more than a few scampers down that road.
Britain is 80% there — for most of her banks.
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The fusion of government policy with banking consequence will then become patently obvious.
Filed under “Obama hasn’t learned this yet.”
From Instapundit (5/7/12):
“PJ O’ROURKE CALLED IT IN 2008:
France is a treasure to mankind. French ideas, French beliefs, and French actions form a sort of loadstone for humanity. Because a moral compass needle needs a butt end. Whatever direction France is pointing in–toward Nazi collaboration, Communism, existentialism, Jerry Lewis movies, or President Sarkozy’s personal life–you can go the other way with a clear conscience.”
Even if they could they wouldn’t. While it is too big to fail, they simply don’t have (Germany for sure) the legal grounds to do more nor the money sum total to do anything about it.
It doesn’t matter how pretty you draw the picture, how accurate seeming, men cannot walk on the sun in sandals and shorts. Same same. Let them blather, there is nothing any of them can do.
On a side issue, Camp David is a really nice place for the president to relax. Perhaps it should be used more often by Michelle and the kids rather than expensive Spanish Vacations.
Why do I get the feeling that the “solution” they are about to come up with is about a trillion U.S. dollars buying up Greek debt …
“Why do I get the feeling that the “solution” they are about to come up with is about a trillion U.S. dollars buying up Greek debt …”
Make that 2 trillion in Bernanke bucks and you have the solution for what temporarily ails the PIGS+F until the next ‘crisis’ of debt obligations that come due in 2013.