11/10/2011 3:11 PM ET|
Politics is Europe's real problem
The problem now roiling the market isn't that Italy is broke; it isn't. Its political leaders simply lack the will to act. And as they dither, other eurozone leaders seem ready to just call it over.
If you needed proof, the stock market moves of the last few days should have convinced you that the eurozone debt crisis is a political crisis and not, now, a financial crisis.
That's not to say there aren't financial repercussions. The effects on European, U.S. and developing-country financial markets are huge. And I hate to say this, but we've just started to see the capital crunch at European banks ripple out into the global economy.
But Wednesday's huge sell-off was primarily a judgment on the politics of Italy, the European Central Bank and Germany. The market said loudly and clearly that it doesn't think the leaders of those bodies have the political will to fix the crisis now engulfing Italy. And without that political will, the next step is the breakup of the eurozone.
Not right away. But the market is saying the breakup is certain. Prove us wrong, investors who are selling the euro are saying (as is the global economy). And so far, the silence is deafening.
On Tuesday, the market got excited -- by Italian politics. News that Italian Prime Minister Silvio Berlusconi had promised to resign after the Italian Parliament approved a new austerity package required by the eurozone produced a rally in European and U.S. markets.
And then, overnight, the markets focused on exactly how vague that promise was and on the dysfunctional realities of Italian politics. The austerity package that was supposed to lead to Berlusconi's departure hadn't, as of Wednesday afternoon, been delivered to the budget committee of the Italian Senate.
On Thursday, Italy appeared headed for a Friday vote on the package, and the uproar calmed down a bit. Reports that the European Central Bank was buying Italian bonds to keep yields down also helped.
But what happens beyond Friday? If Berlusconi resigns, will he be followed by a caretaker government of technocrats (as many hope) that could push through austerity measures and economic reforms?
Frankly, it doesn't look like any of the proposed leaders of such a government would have the political backing to get the needed changes into law.
And maybe, politicians like the Northern League's Umberto Bossi were saying, any post-Berlusconi government should be headed by the leader of Berlusconi's party.
And maybe rather than a caretaker government to push through reforms, everything should wait for new elections -- in February or March.
In other words, nothing in Italy might change at all. Which is exactly what the financial markets fear.
But Italy could act. The Italian crisis is actually easy to fix compared with that in Greece, for which there may not be any solution except default.
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And the real problems here in the USA are because of idiots like the Republicans, Neo-Cons, Libertarians, Tea Partiers, Oligarchy elitists, crony Capitalism, Corporate Fascism, Unregulated markets and agencies, The Fraud Street Ponzi casino, Globalization, Un-fair global trade, job outsourcing, tax cuts and tax loopholes for the rich only, tax evasion by the rich only, Right to Fire State Laws, big money bailouts for corrupt and failing banks and other big businesses, Subsidies for the rich only, Legislation written to benefit the rich only and idiots like Jim Cramer and you Jim Jubak.
You should all be in jail for life! Get out of my country traitors!
The Berlusconi government has already passed an austerity and reform package designed to balance Italy's budget by 2013. But that plan, European Union inspectors have said recently, isn't sufficient to get to balance by 2013 because economic growth in Italy (and in all of Europe) has slowed and is slowing further. Hence the need for a new austerity package, the one that hadn't been delivered to the Italian Senate as of Wednesday afternoon. (It was finally delivered on Wednesday evening.)
*gasp* you mean that cutting spending during an economic downturn will do EXACTLY what past history said it would do: Decrease economic growth and increase budget deficits [due to a decrease in taxation revenue]?.
Kenysian econonomists have it right: You increase spending during recessions to keep employment [economic growth] from dipping too much, then step out of the way once that economic growth leads to more hiring. After that, THEN you can address any long-term bugetary issues.
Cutting spending during a recession causes more debt in the long run. See 1937 and 1978 for reference.
Ron Paul is the only sane and honest person ive heard
Ron Paul is insane, and his economic policy would bankrupt the country. Nevermind that almost all his views are hypocritical.
For example, he is against farming subsidies, which drive down the cost of farming [and thus, the cost of food]. Which is more expensive to you: The ~$50 or so you pay in taxes to pay for the subsidies, or the cost of food for an entire year if prices went up 20%? But at the same time, he's all for subsidies to doctors...[PS: Ron Paul is a Doctor].
Same logic applies to any flat tax plan. How does raising taxes on 60% of the population, and giving a massive tax cut to the top 10% accomplish ANYTHING? Thats why every flat-tax plan thats been discussed will significantly drop government revenue [and thus: Increase the deficit even more]. And at the same time, because the majority of people will have less money [through higher taxes], economic growth will slow down. Totally economically counter productive [PS: Ron Paul gets an instant tax cut for himself under this plan].
Why are the rich gaining wealth at record rates? They have gotten even richer under the Democrats.
Technically true; EVERYONE gains wealth faster under democrats historically. The riches share of the total economy dropped under Clinton, for example, despite the fact they still had more money overall due to economic growth. Its imporatnt to seperate "real wealth" with "share of the economy" when talking about the nations wealth makeup.
he first question why is the lazy people growing in number so fast?
Note the silly assumption that people are poor for no other reason then they are lazy. Of course, some people HAVE to argue this, because they've been feed since birth that the "capitalism rewards hard workers" argument. If people work hard and are still poor, their entire economic thinking collapses, hence the "poor people are lazy" argument.
The rich provided a product or service at a price which so many desired. They earned it.
Here's the problem though: While their wages continue to rise, the wages of those that actually create, produce, market, sell, improve, and invent underneath them has NOT risen to match.
Products sell because there is DEMAND for them. One of the conditions for demand is people with money to spend. No consumer spending, no demand, simple. As the middle class continues to shrink, so does consumer demand.
Thats the primary reason we are still in a period of low economic growth: Despite record coorporate profits and a wealth distribution not seen since the early 1900's, economic growth is lackluster, due in large part to a decline in consumer spending. As a result, there is no pressure to increase production by hiring new workers [as demand is less then supply], and thus you don't see significant monthly changes to unemployment. Thats exactly why the tax credit approach taken by the president CAN NOT WORK: Even with the tax credits thrown in, business can not justify hiring more workers until demand picks up, which will not happen until the middle class has more money to spend.
This decrease in demand also explains the rise of mega-coorporations: There isn't enough demand by consumers to allow for significant market compeititon, as even the slightest price/performance advantage of a product will lead cash-strapped consumers to one company or the other. As such, alternatives without large cash reserves quickly fold from the market, leaving a few giant companies with control of entire sectors of the economy.
Your thinking, and the thinking of many others here, is that if a product is successful, ONLY the person at the top of the food chain should benifit; those that actually produce, refine, sell, improve and create products shouldn't benifit.
"We've spent all of ours, we want to spend all of yours", now. How about the whole world learning to live within its means?
Pardon me for saying:
US Federal Debt: ~$14.5 Trillion
US Household Debt: ~$14.5 Trillion
Government seems to be reflecting the publics values quite nicely. I think a lot of people need to look in the mirror when talking about money, because individual households don't do any better on their finances.
This is to all the Mad Hatter types who think "farm subsidies drive down farm prices". This is a true "Alice in Wonderland" assertion. The stated purpose of farm subsidies is to RAISE the price of cotton, sugar, etc. by putting land out of production, buying up commodities, etc. This was once a "support" for small farmers but now mainly just goes to corporations who do most of the farming. And of course it was ALWAYS paid for by consumers who had to pay more for commodities. Actually paid twice, since they also had to pay the taxes to cover this boondogle.
Perhaps the person talking about Australia is confusing this with Import Duties. These also protect domestic farmers by raising the price of imported commodities. But Australia has it's own inflation going on because of all the money coming in from China for copper etc., so that is more likely the cause. It's hard to keep them down on the farm when the mines pay big money.
Can someone please define fair share? If I am paying 10% of my income to the Federal Government am I paying my fair share, excluding SS and Medicare? If somebody is paying 20% and somebody else is paying 0%, which one isn't paying their fair share.
I am so confused by Fair share and skin in the game, If somebody pays their 7 or so percent to SS and Medicare but no federal income tax, do they have skin in the game?
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