Consumers are snatching at any evidence of indications that this recession is ended. Reported 3rd Q GNP was impressive. Durable good orders were positive for the first time in over 18 months last month and anything indicating that the worse is past makes headlines. The drug addict wants to know he is cured.
No question that the stimulus package prevented a collapse of not only our economy, but also of the worlds’ economy. Without ours, other countries such as the UK, Ireland, and Spain would have failed miserably. Without it, we would have had an economic debacle in 2008, every bit as bad as we had in 1929. We dodged a bullet.
But debt accumulation is bad, its bad for government, bad for industry, and bad for the people who allow themselves to be sucked into the morass of debt. There is no denying that over the last 10 years, the entire economy was made drunk by dipping into the elixir of cheap money, using unrealistically inflated asset prices in stocks and real estate as collateral. What was unnoticed and was hugely unpopular was the fact that from 9/11, the West entered a 30 years war with fundamentalist Islam.
What was lost, can be restored. But it will take time , time to establish some goals and objectives and changes. We cannot continue with a financial system being held hostage by a few monster financial institutions too big to fail; that are immune to market vagaries, or to regulation. These institutions are of no visible benefit to the everyday citizen; institutions where there is little or no trickle down, save for the salaries of its employees.
After the economic implosion, the US populace wanted a ‘Roosevelt Moment’ with the election of Obama…..
What is needed to restore economic strength? A ‘New Deal’ at grass roots is called for. Creation of jobs is the first requirement. Recognize everyone’s right to have a job, a right to earn enough to make a decent living; to create trade in an atmosphere of freedom; provide programs that achieve good health and good education. This in turn will create a sense of security. Without security at home, you cannot have security abroad.
There is a broader issue about the rights of democracies. Voters’ views should clearly hold sway over domestic conditions but only if those policies can be funded internally. This is a lesson Greece should embrace as they embark on efforts to dis-mantle the Eurozone. Compromise, however, may be much more difficult. SYRIZA’S unequivocal victory in Sunday’s Greek elections reverberated all over Europe.
His victory had been assumed but the margin of victory was at the high end of expectations. Around European countries, his win gave inspiration to populist anti-austerity parties on the left and right.
For the rest of Europe, the question is how strongly Mr. Tsipras will press his demands for a renegotiation of the bail-out program agreed with the so-called “troika” of the European Commission, the European Central Bank, and the IMF. Mr Tsipras has demanded a significant haircut in Greece’s national debt, and has vowed to rehire laid-off government workers, raise the minimum wage, and hike government spending to pay for free electricity and health care for the poor. That uncompromising anti-austerity agenda has inspired many Europeans, while giving their governments the shivers.
The most important response will be that of Germany. Angela Merkel, the chancellor, is reviled in Greece for her leading role in negotiating the bail-out’s terms, and has been diplomatic about Mr Tsipras’s victory to avoid further provocation. But other politicians from her coalition are doing the talking for her. Günther Oettinger, a commissioner in Brussels and a member of Mrs Merkel’s center-right Christian Democrat party, told German public radio that although nobody wants Greece to exit the euro, another debt haircut is out of the question. Hans-Peter Friedrich of the CSU, the Christian Democrats’ Bavarian sister party, urged the Greeks to continue with austerity because German taxpayers should not bear their burdens. Even the center-left Social Democrats in Mrs Merkel’s coalition joined the chorus. Thomas Oppermann, their parliamentary leader, said Greece would do better to fight corruption at home than to break its commitments abroad.
The picture is very different in France, where Marine Le Pen and her Euro-sceptic, far-right National Front are riding high in the opinion polls, in part by opposing austerity and economic reforms demanded by Brussels. In a classic example of right- and left-wing alignment, Ms Le Pen has backed Syriza on the basis of its opposition to austerity, though she has always criticized its relatively tolerant immigration policies. But Syriza’s win could present Mr Hollande with a headache by emboldening the left-wing rebels within his Socialist party, who consider the current prime minister, Manuel Valls, and his finance minister, Emmanuel Macron, unforgivably liberal.
Within the eurozone, Italy is the country whose position is closest to Greece’s. It faces a debt load of 132% of GDP and has its own populist left-wing party, the Five Star Movement, which like Syriza clamors for an end to austerity. Italy’s center-left prime minister, Matteo Renzi, was the first foreign leader to congratulate Mr Tsipras on his win. Yet Mr Renzi has generated growing political opposition with his ambitious agenda of liberal reforms, and his foes have been appropriating Mr Tsipras’s win as their own. “Our Euro-sceptic vision will continue to be confirmed everywhere,” declared the Five Star Movement in its response.
But in most of Europe Mr Tsipras’s win was taken as a defeat for Brussels, especially in the European capitals where such a defeat is most welcome. For the Kremlin, which sees the disintegration of the euro zone and the weakening of the European Union as among its main strategic interests, the Greek election results were a gift. Vladimir Putin was quick to congratulate Alexis Tsipras on his victory, and Russian state television gleefully reported that Syriza’s landslide means the end of the EU’s hold over Greece, which “brought the country nothing but unemployment and misery”.