‘France and other, weaker EU members have begun pushing for “growth.” This in of itself reveals how clueless the political elite in the EU are (economic growth in Europe is synonymous with living beyond one’s means and/or living off of others… the very policies that have lead to the EU Crisis).
Indeed, this shift from focusing on austerity to growth is really just a switch from one side of a coin to the other… without actually addressing the fact that the coin itself has no value as a concept.
Let me explain.
Both growth and austerity are political hot buttons that fail to address the core issues plaguing the Euro-zone. Those core issues are:
1) Age demographics, which courtesy of a welfare state translates into…
2) Massive unfunded liabilities and debt overhang that stifles growth…
3) And an unwillingness to innovate or pursue democratic capitalism
When political leaders talk about austerity today, they’re not even actually addressing real austerity. France, for instance, is balking at the prospect of submitting to more “austerity measures” when it actually increased its spending by $62 billion from 2009-2011.
the whole exercise becomes a total joke when you realize that as far back as
2004 France had unfunded liabilities (social programs, pensions, etc) equal to
over 500% of its GDP. As Jagadeesh Gokhale of the Cato Institute notes, in order to meet these
needs without increasing taxes,
another way… in order for
Speaking of which, spending beyond one’s means is precisely what EU leaders are referring to when they talk about “growth.” For the EU, economic growth is synonymous with spending money (especially if it’s someone else’s money), NOT economic innovation or organic growth from small business.
As I mentioned before, the “austerity” and “growth” to which EU leaders refer are simply two sides of the same coin: that of assuming that massive problems can be dealt with superficially. It’s akin to polishing the brass on the Titanic as it sinks: in the short term, you’re making a small difference, but in the big picture, you’re ignoring the very real, enormous problem you need to tackle.
enormous problems are a massive debt overhang… which cannot be dealt with by
the ECB, Fed, or even the IMF at this point. The Fed has already openly
admitted that it cannot perform more aggressive easing (it is an election year
That’s the real deal here. And it’s all happening at a time when EU sovereigns, corporations and banks need to roll over TRILLIONS of Euros in debt at the same time as they need to issue hundreds of billions of Euros in new debt.
that note I fully believe that the EU will collapse before the end of the
summer. So if you have not taken steps to prepare for the end of the EU (and
its impact on the
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