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View Diary: What's Happenin'? Ship of Fools 1.3.13 (78 comments)

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  •  Ships of fools (20+ / 0-)

    Are ripe for rocking, Doncha think? Yes, rock that boat and tip it over, knocking those fools right into the sea. :)

    Another recommended read, this time from Roubini. It is on Financial times, which requires a free subscription. Here is a good chunk of it.

    US has been let down by its leadership

    President Barack Obama and his allies will argue that the deal concluded on Tuesday raises only $600bn of revenues over 10 years rather than their initial target of $1.4tn – and therefore there is further room for tax rises, at least for the wealthy. Republicans will argue that spending should now be radically cut, since this week’s deal did not address that side of the national balance sheet. (Even the 2011 debt ceiling deal reduced prospective spending by $1tn).

    In the meantime, the likely fiscal adjustment in 2013 will be about 1.4 per cent of gross domestic product. (Spread between the expiry of the payroll tax cut, the increase in the tax rates of the rich, and some eventual cuts to spending.)
    This translates into a 1.2 per cent of GDP drag on the economy during the year. If the economy was happily growing above trend – at say 3.5 per cent – that would not be such a big deal, as growth would still be above 2 per cent. In the past few quarters growth already averaged about 2 per cent. So the US could quite easily come perilously close to stall speed this year – or worse, if the eurozone crisis worsens.

    The longer-term picture is bleaker still. The reality is that America is yet to wake up to the full extent of its fiscal nightmare. Even the typical Republican voter is not – being on average older and poorer than a Democrat voter – in favour of gutting the welfare state. Tea Party extremists are more noise than signal. That is why the plans of Mitt Romney and Paul Ryan, the Republicans’ losing presidential ticket, postponed all the tough spending cuts on Social Security and Medicare by a decade.

    “Democracy is not just the right to vote, it is the right to live in dignity.”  ― Naomi Klein

    by cosmic debris on Thu Jan 03, 2013 at 05:42:14 AM PST

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