Friday, April 6, 2012
Free Markets = Mountains of Debt
The gospel of "Free Markets" according to the likes of Paul Ryan in Wisconsin, presidential candidate "I-Ran Away" Romney in Massachusetts who both believe government spending should be reined in on every level EXCEPT DEFENSE, doesn't take into account the following:
MOST FREE MARKET ECONOMIES ARE UP TO THEIR EYEBALLS IN DEBT!
Here's a quick snapshot (table below) of GDP to DEBT ratios across the "free market" landscape.
According to Antonio Fatas and Ilian Mihov, both economics professors from INSEAD, http://www.insead.edu/home/
a massive de-leveraging of debt may not be necessary for countries that run current account surpluses and more importantly, ones that run current account surpluses and TRADE SURPLUSES!
Like Japan and China, both have trade surpluses with most of the rest of the world. However, unlike Germany in the Eurozone, many of the other weaker economies, Ireland, Spain and Portugal, run current surpluses and CRITICALLY OWE MONEY to other nations. In other words unlike Japan, Ireland owes money to other nations and banks from those other nations, Germany, England etc.
Here is the domino effect that will begin in late 2012 or early 2013 --- The charade that is going on in Greece and Ireland, where the ECB/IMF deludes the other Euro nations that progress is being made will crumble and Greek citizens will most likely continue their opposition to "austerity", thus impeding any substantive economic and social changes.
Similarly in Ireland the March 31st deadline for the "household charge" a 100 Euro stealth flat tax (predicted to increase over the next 2-3 years) collected just 50% from households. Of the 1.6 million households eligible to pay the "charge" just over 800,000 paid. The other half told the government to go SCREW ITSELF!
In some of the more radical parts of Ireland thousands of OMOTS protested the charge, some engaging in violence against government officials and cops.
Of course the mainstream media in Ireland downplayed this.
Here is a story in the Irish Times that illustrates how the household charge has divided the nation:
The other side of the protest was the National Convention Center, where the party that governs the country was holding it annual meeting, full of smile and laughs and back slapping, while 50% of the population were outside shouting and chanting abuse at these political clowns inside.
HDD believes that the Irish OMOTS has woken up from their post Celtic Tiger Hangover! They understand now more than ever that the IMF-ECB "austerity" is a sham, a way to assist Too Big To Fail (TBTF) banks to remain solvent while hospitals, roads, schools, and basic services are cut to the bone.
Why pay taxes if those taxes are used to repay maturing bonds issued by a bankrupt bank?
Why pay taxes to a corrupt government that represents banking interests rather than the population they are supposed to represent?
The picture above is a snapshot of the OMOTS who believes the household charge in Ireland is a scam, a sham, a testing of the social and economic waters!
The lady with the cane in green is not some radical O-W-S type, or anarchist, rather a retiree most likely who played by the rules and saved her money, hoped for a decent pension and believed, like most of her generation that banks were respectable institutions, not fiscally reckless and irresponsible entities.