A Good Summary of a Confusing Situation – 08/03/2011

Dear Ladies and Gentlemen,

For Your Entertainment (FYE)


“The U.S. budget battle was symptomatic of a country deeply divided over the role of government, its responsibility to its citizens, and who should pay for which benefits.

Until those questions are answered, lawmakers cannot and will not address the long-term fiscal strains, which come primarily from rising retiree healthcare and pension costs.”


“”Those demanding spending cuts now are like medieval doctors who treated the sick by bleeding them, and thereby made them even sicker,” Nobel-prize winning economist Paul Krugman wrote in the New York Times.

In April 2009, at the depths of the global recession, President Barack Obama put the world on notice that it could no longer rely on “voracious” U.S. consumers.”


“European countries entered the 2008 financial crisis with higher government spending levels than in the United States, and will emerge with a smaller public sector, fewer civil servants, higher retirement ages, and elevated unemployment particularly among the young and old.”


“In the hardest-hit European countries, youth unemployment is now around 40 percent of the 16-25 age group.”


“Many European countries are ahead of the United States on the austerity path and have dared to raise taxes as well as cut spending, something that was beyond the politically riven U.S. Congress even though tax levels, especially on rich Americans, are lower than the European average.

Europe offers a glimpse of the battles that could come as Washington rewrites its social contract. Credit rating agency Moody’s warned last year that the budgetary decisions facing advanced economies may “test social cohesion”.

An angry mood of “why should we pay for them” has dominated the response to the Greek, Irish and Portuguese fiscal crises in northern European countries, particularly Germany, the Netherlands, Finland and Austria.”


” The best hope for Asia’s sustained growth lies within Asia itself. Household income is rising in emerging markets, creating a burgeoning middle class that can consume at least some of the goods the United States or Europe no longer want.”


“”If you are not investing wisely in your infrastructure and your people you are undermining your ability to compete globally,”


“Per capita average income is still far below Western norms but adjusted for purchasing power, private consumption demand in the “BRIC” economies of Brazil, Russia, India and China is already 93 percent of the U.S. market,


“China’s consumption accounts for just a third of its gross domestic product, less than half the level in the United States.”


“China’s current strength may be its longer-term weakness. The wage growth that lifts its consumption potential makes it less competitive as the world’s low-cost factory. Even its population advantage is fading as the one-child policy adopted 30 years ago means it may begin facing labor shortages within five years.

The big emerging markets have so many domestic challenges that they are not yet prepared to take the lead on politics or policy.”

Big Hugs and Kisses to All!  ;+)


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