The NYT reports: “With its rising budget deficit and ballooning trade imbalance, the United States is running up a foreign debt of such record-breaking proportions that it threatens the financial stability of the global economy, according to a report made public today by the International Monetary Fund. In nearly 60 pages of carefully worded analysis, the report sounded a loud alarm about the shaky fiscal foundation of the United States, questioning the wisdom of the Bush administration’s tax cuts and warning that large budget deficits posed significant risks not just for the United States but for the rest of the world.”
Historically, this kind of fiscal mismanagement, and the commensurate warnings from the IMF if ignored (and the Bush administration has already said it will ignore them), trigger the following consequences:
This is not an exaggeration. Ask anyone in a country that has faced it. And while no one in the world wants to see this happen in the US (because it will have a domino effect, pushing the whole world into a depression), the world cannot afford to allow any country to borrow wildly beyond its means. Bush is playing brinkmanship here, rolling the dice and hoping that the economy will somehow recover and achieve unprecedented and sustained record prosperity for at least a generation to repay his staggering debt, before global investors lose their nerve and stop lending to the US, and the IMF is left with no alternative but to step in. The Times reports: “Though the International Monetary Fund has repeatedly criticized the United States on its budget and trade deficits in the last few years, this report was unusually lengthy and pointed…Fund officials warned that the long-term fiscal outlook was far grimmer, predicting that underfinancing of Social Security and Medicare would lead to shortages as high as $47 trillion over the next several decades, or nearly 500 percent of the current gross domestic product in the coming decades.” This is the first warning from the IMF. It will be ignored, as it was in Argentina. The consequences, for all of us, will be devastating. You know who to thank. |
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Cats and dogs living together; Pat Robertson praising a Muslim terrorist action; and now anti-globalization leftists speaking respectfully of the IMF? This must be a sign of the End Times…
“anti-globalization leftists” (and I’ve not read much of Dave, but I doubt he fits the stereotype you’re attempting) aren’t anti-globalization any more than critics of the Bush Administration are anti-American. The conversation, if we were mature enough to have it, is about how globalization should work. Should it be more democratic? is one question, for instance.And as for speaking respectfully of the IMF. It’s called recognizing reality, the reality of the IMF’s power, not “respect” as in “what a great institution.”
“The conversation, if we were mature enough to have it,” was actually about the Federal deficit. But if you really want to take issue with my joke by saying “‘anti-globalization leftists’ … aren’t anti-globalization,” then I have to say, Horse-muffins! A large (or at least vocal) segment of the American left (including Dave) have explicitly called for legal restrictions on imports and exports, have explicitly blamed “globalization” for a ridiculously wide range of evils, and have very often focused their (not always coherent) verbal attacks on such international institutions as the World Bank and IMF. Are those vocal opponents of the IMF willing to admit that that international organization, at least, isn’t as evil as they’ve portrayed it to be?This is not a recognition of the IMF’s “power,” for it has no power over our deficit.
explicitly blamed “globalization” — i repeat, for the slow of with, that the conversation is — or should be — about what “globalization” means for people. Most leftists know this, despite efforts such as yours to portray them as “the source of evil” or whatever you are feebly trying to say.
make that “wit” and no one is arguing about IMF power over the U.S. deficit, only what actions the IMF might take due to the deficit.(by the way, I hadn’t noticed Dave talking about the Federal deficit in this post, thanks so much for setting me straight)
(Sigh) Here I go, getting sucked into another debate with PTW. For the record:1. I don’t like the IMF. Most third-world governments (like a lot of consumers!) are not strong enough to resist the temptation to borrow money they may never be able to repay. As a result, when the IMF steps in it causes terrible suffering to many of the people in bankrupt nations. More self-discipline is needed in making lending decisions in the first place, in educating and monitoring countries so they don’t get into such dire situations, and, when they do, a global co-insurance to spread the loss and write off at least part of the debt. Mature companies should know better than to emulate third-world reckless borrowing, because they know damn well what the consequences are, and they never need to get into that situation — it’s gross lack of responsibility.2. My position on globalization and ‘free’ trade is clear: it is in the best interests of the PEOPLE of nations (remember them?) to protect viable domestic industry from inexpensive foreign competition, especially when that competition comes from countries that have abysmal social and environmental standards. When it comes to goods and services that cannot reasonably be produced domestically (like coffee, minerals etc.) there should be minimal regulation on the importation of those goods and services from other countries. That’s called ‘fair trade’. People before profit. And recognizes, as I’ve said before, that ‘markets’ are not perfect.
Dave–do you think he’s really “rolling the dice” hoping for an upturn to pay for his policies? It almost seems like he’s deliberately sabatoging the country to me. The Mars thing is what tipped me over. A massive new space program while all this is going on? This goes beyond stupidity to something far more malicious. It seems like a deliberate attempt to drain our resources and destabilize the United States. If I wanted to move America toward authoritarianism, this is exactly what I’d do.
Susan: Wow — that was exactly my reaction to Bush’s weird Mars statement. Absolutely bizarre. My hope is that he’s just infatuated with space travel and is boyishly enthusing about the hype that seemingly everyone is caught up in. But the guy who is really worrying me is Greenspan. He’s not saying anything — talking lately only about policies he followed through the start of the dot com bubble. He should be front and centre and he’s invisible.
The Euro? Are you kidding? Look at the demographic situation in Europe, and cross it with the huge social welfare net there. If you think the US has issues with social security and medicare, but don’t recognize the bigger problems Europe has – you’re nuts. Here’s what’s going to happen:10-20 years from now, there will be an OMG reaction in the US, after which benefits for entitlement programs will get cut, dramatically. The problem will be ignored until then. in Europe, the sheer number of people on aid will prevent similar action, and the demographic situation will make things worse and worse.No, the Euro is no safe haven.
Bush’s Mars statement has nothing to do with being boyishly enthusiastic about space and everything to do with the divisibility of 2004 by 4.It won’t be funded, except for a small token quantity that will be paid for by cutting other, arguably worthier and certainly more likely to be successful projects and programs.But talking about it as if he meant it makes him sound like a bold visionary like JFK, just long enough to (he hopes) win an election.
Sometimes the truth, though not said can be that which is most obvious. I believe this proposed Moon- Mars adventure is only a politically motivated attempt to try and grab the hearts minds and votes from the citizens of Texas and Florida. In my opinion Bush43 has no shame and is likely to say anything if he thought it would help in being reelected. I pray the american people are not deceived by this foolishness. Regards SD ~<>~
Susan. Dave – Bush is deliberatley trying to sabatoge the US economy and Dave you passed right by the reason when you said “With no ability to borrow abroad and domestic lenders tapped out, there is no alternative but to radically slash government spending.”. By wrecking the economy and draining the treasury Bush will be able to do what he most desires which is to drastically cut the federal government and get it out of all the social welfare, corporate controlling programs he is opposed to. Best of all he won’t take all the heat for achieving those dreams as congress will have no option but to slash every entitlement program in sight from Medicare, education and Social security to welfare in order to get the budget back in line.He wants to see thedollar fall for now and to have theUS credit rating bottom out – it serves his “higher goal” of reducing government to a pale reflection of what it currently is and privatizing virtually everything.
Before reading the comments I was prepared to comment with much the same as the dynamic driveler. I’ve read elsewhere that the first part of Dave’s point number 6 (slashing programs) is the explicit goal of the neocon enclaves that are counselling the Bush administration. And that the strategy for doing so is to bankrupt the government. When people are freezing, sick and hungry in the streets, and the government has no money, faith-based and corporate backed charities will be the only alternative. Those charities will be able to set whatever guidelines they like for doling out their favors. “You can have a shower and a bed, but first you have to listen to this sermon.”There’s an additional bonus as well: if by some stroke of luck the Democrats win in 2004, the damage is already done. The economy _will_ tank during the next presidential term, ensuring the return of the neocons in 2008 so they can “repair” the small number of fixes the Democrats might be able to pull off.
So depressing, and so scary because it’s probably close-to-accurate as a forecast. Many days I feel like we are living in a real-time science-fiction movie.I wonder where and when the tipping point is, for the obviousness of what is being done by the Bush administration. I wonder what an early 20th Century version of the French Revolution in North America might look like ?Can a government kill all of its poor citizens, and actually get away with it ?