I foresee, in the following New York Times reporting on the Eurozone economic crisis, the end of Barack Obama’s presidency:
Jens Weidmann, president of the Bundesbank, the German central bank, argued Monday that the core problem in the euro zone was a lack of faith in the soundness of governments’ fiscal health.
The only solution, Mr. Weidmann said at the Economic Club of New York, is to put public finances in order.
“There is little alternative,” said Mr. Weidmann, who is an influential voice on the governing council of the European Central Bank. “In the end, you cannot borrow your way out of debt; cut your way out is the only promising approach.”
Mr. Weidmann’s views are widely shared in Germany. But Germany is becoming isolated in Europe as an increasing number of economists and policy makers argue that euro zone countries could do more to offset the social effects of austerity on ordinary Europeans, which include a surge in suicides. […]
Leaders like Mr. Sarkozy may gripe about the stubbornness of Germany and the European Central Bank. But economists also fault those leaders for doing too little to encourage investment and job creation within their borders — for not doing the sorts of things that many experts say are the only way to achieve the long-term, sustainable economic growth that government spending can seldom achieve.
Most euro zone countries, including Germany, rank low on the World Bank’s annual rankings on the ease of doing business. The survey grades countries according to such factors as how long it takes to set up a new business or enforce a contract in court.
Germany was only 19th in the most recent rankings, behind Malaysia and Thailand. Italy was a dismal 87th and Greece was in 100th place out of 183 countries.
In many cases, countries could improve their rankings by cutting red tape, which would also save money. But changes to make it easier to start a business, for example, often run afoul of vested interests that fear increased competition.
Even leaders in some of the afflicted countries say that fiscal stimulus through more government spending could backfire, by taking off the pressure on political leaders to make necessary changes.
Vítor Gaspar, the finance minister of Portugal, said in an interview that his country — under a previous government — made a mistake when it responded to a downturn in 2008 by pumping money into the economy. The result, he said, was a deeper debt problem without creation of any lasting growth.
Isn’t it obvious that debt austerity politics is atrocious for politicians in power, liberal or conservative? Whatever President Obama promotes—austerity or yet another round of deficit spending—he looks to be damned. The dynamics of the European debate are what’s coming to America in this election cycle. Hitchcock’s birds are about to ensue. President Obama will be the one driving the car out of the final scene (unfortunately), and those on their perches watching him go will be Mitt Romney and the new Republican members of Congress.
The presidential election in November in the United States won’t even be close.
“In many cases, countries could improve their rankings by cutting red tape, which would also save money. But changes to make it easier to start a business, for example, often run afoul of vested interests that fear increased competition.”
Corruption is a major factor in this crisis. Apart from former communist countries, Greece is the most corrupt country in Europe, followed by Italy. The least corrupted countries are Denmark, Sweden and Finland – all have a public debts less than 50 percent of GDP. Other countries with little corruption like Australia, New Zealand, Switzerland and the Netherlands have similar numbers.
So the that’s what the discussion should be about: the nature of corruption, its causes and mechanisms and how it can be stopped.
Politics based on contending interest groups lobbying for government favors is inherently corrupting, don’t you think?
Expecting government to bail you out when you fall or are irresponsible is also corrupting (as are tax laws based on favors to constituencies).
The rot is pervasive.
When Bill Clinton left office, the national debt in the US was zero. We’ve basically averaged putting a trillion dollars a year on the collective “credit card” since then.
Republicans will be the beneficiaries this year because there is a Democratic president on which the electorate will focus its disapproval, but this is largely Bush’s fault.
A strong government can induce corruption when money is handed out rather earned, but it also makes it harder to commit white collar crime since the various government agencies can keep track of what people and businesses are up to.
Expecting to be bailed out is more a sign of corruption than a cause. A strong government needn’t bail out anyone. We had a domestic crisis back in the early 1990s and the government did bail out the banks but they were also very clear about the fact that they were not going to make a habit of it. And, lo and behold, our banks have been staying away from crazy speculation since then.
I think corruption may be a matter of demographics and geography. If you look at the least corrupted countries they usually have a small population often geographically isolated and with relatively little tourism. All the least corrupt nations seem to have at least two of these criteria.
I think you’re wrong. The Republicans will not back Romney. This will be a record low turnout election.
Please explain why vast amount of new debt approved by Congress since President Obama took office is Bush’s fault. The Democrats contolled both houses and the presidency. How is that Bush’s fault?
You’re free to be in denial concerning Republican culpability, since 2000, in ballooning the federal deficit.