So far, here in the U.S., the Obama administration has been able to successfully stall the implementation of deep government spending cuts in the midst of America's worst financial downturn in 70 years. Despite the never-ending whining coming from conservatives who believe in the doctrine of "expansionary austerity", (an oxymoron if ever there were one), U.S. leaders have been able to fend off the hysterical cries from Republicans and their rich constituents. The expansionary austerity believers would like to take the downturn's opportunity to slash and burn the safety net in America.
That is why for 2 straight years now all we have heard from media, Tea Partiers, Republicans, moderate Democrats and the pimps for corporate interests.....is how desperately we need to slash spending on programs for children, the poor, the elderly and the vulnerable. That is why Republicans have worked so desperately to smash and kill unions and privatize Medicare, Medicaid, and Social Security. They are taking a political shot during one of our most vulnerable economic times.
However, cutting government spending during a deep recession marked by high unemployment, low interest rates and diminished demand...in other words, enacting austerity measures right now....will never result in economic expansion.
Thankfully, so far, the expansionary austerity nutcases have not won the day in the U.S. As a direct result of avoiding the screeching that we can cut our way to expansion....the U.S. economy has actually fared better than many European countries who are already knee-deep in the totally untenable expansionary austerity swamp.
For example, there's Britain...
Britain’s experiment in austerity.
When the Cameron government came in, it was fully invested in the doctrine of expansionary austerity.
Now it turns out that contractionary policy is contractionary after all. As a result, despite all the austerity, deficits remain high. So what is to be done? More austerity!
I realize that some readers may simply dismiss anything that Paul Krugman has to say....exactly why, I'm not sure...but he has been spot on in his withering attacks on the expansionary austerity gang...
...history says that a financial crisis reduces long-run growth potential if policymakers don’t limit the short-run damage it does.
And yet what’s happening in Britain now is that depressed estimates of long-run potential are being used to justify more austerity, which will depress the economy even further in the short run, leading to further depression of long-run potential, leading to …
And once again, Krugman borrows The Reverend's analogy to help explain what expansionary austerity folks are really doing.....
It really is just like a medieval doctor bleeding his patient, observing that the patient is getting sicker, not better, and deciding that this calls for even more bleeding.
Just because Leaders are Leaders...doesn't mean that they will make the proper decisions at the proper time. This has proven to be true of Wall Street leaders, Roman Catholic leaders, Penn State leaders, U.S. war Leaders....and of course, the corporate media who worships all of those Leaders and prove their love daily by keeping Americans misinformed.
After looking at the awful decisions being made by certain European Leaders over the last few months, I really do wonder whether this August 8, 2011 article from The New Republic will turn out to be prophetic.
Excerpted from the Business Insider...
John Judis of The New Republic argues that a global depression far longer and more severe than anyone expected now seems nearly impossible to avoid. Judis believes that the coming "depression" will be accompanied by geopolitical upheaval and institutional collapse.
"As the experience of the 1930s testified, a prolonged global downturn can have profound political and geopolitical repercussions. In the U.S. and Europe, the downturn has already inspired unsavory, right-wing populist movements. It could also bring about trade wars and intense competition over natural resources, and the eventual breakdown of important institutions like European Union and the World Trade Organization. Even a shooting war is possible."
...the fundamental problem – the spiral downwards caused by confidence crises and ever rising interest rates – is exactly the same now as it was in 1931. And as Italy and Spain come under attack, we are reaching the limit of how much that sticking plaster can heal. Tensions between European countries unseen in decades are emerging."
Numerous world Leaders are doing exactly the wrong thing in the wake of an historic economic downturn. Leaders who obviously place their trust in a totally contradictory and self-defeating policy.....are slashing and cutting their way to economic expansion. A fete which cannot be done.
We are fortunate here in the U.S. that, so far, the Obama administration....without ignoring the President's gestures seemingly favoring the expansionary austerity crowd....has not made the same mistakes as many European Leaders.
Let's hope "profound geo-political repercussions"...or a "shooting war".....can be avoided, despite the wrongheadedness of many of Europe's Leaders.
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