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  • One (Small) Reason For Optimism at the G20 Meeting

    Herr Weber

    The European Union (EU) is once again lecturing America on its economic policies, and thanks to President Obama’s policies and his allies in Congress, the EU is right and America is wrong.

    Europe, like the United States, is plunging into recession. France saw a stunning 13.8 percent decline in industrial production since last year; Sweden’s drop was 22.9 percent roughly matching the drop in the U.K.

    The U.S. responded to its recession by adding a $1 trillion plus fiscal stimulus on top of a nearly $1.5 trillion deficit for 2009. Even for those misguided adherents to the magic money of fiscal stimulus, this is madness. With these policies, the United States government will rack up more debt in 18 months than George Bush did in 8 years.

    Europe is having none of it. To be sure, the various European governments have passed stimulus plans of their own, but these are puny in comparison to the president’s massive attempt to leverage the U.S. economy. Whereas the federal deficit will approach 13 percent as a share of GDP, in Europe fiscal stimulus will be 3 to 4 percent of European GDP.

    Axel Weber, the President of Germany’s Bundesbank expressed it well when he said, “The expectation that we could neutralize this synchronized recession through short-term fiscal policy measures is false. We should not even try.” Herr Weber is right; President Obama is wrong.

    Herr Weber went on to point out that “there will be costs” associated with irresponsible fiscal policy. Right again, and the American people will face those costs in lost opportunities, higher interest rates at home, and higher interest expense in the federal budget forevermore. It’s a sad day when America needs to look to Europe for economic policy guidance.

    President Obama should expect a lot of Dutch Uncle talk behind closed doors at the upcoming G20 meeting. We can only hope he listens.

    Posted in Ongoing Priorities [slideshow_deploy]

    2 Responses to One (Small) Reason For Optimism at the G20 Meeting

    1. Fernando, Houston says:

      I couldn't assemble a more disasterous set of Legislative and Executive economic decisions if I tried.

      Herr Weber said "American people will face those costs in lost opportunities". He's right. Money that could go towards taking advantage of future opportunities–technology, ecology, etc.–may have to be spent on repaying the Chinese instead.

      People tried the scheme of borrowing money to make money before–a contributor to the stock market crash of the '30s. Now the US is attempting to borrow money to "make money"? Does this not sound wrong?

      The Chinese have already said they hate the US http://www.politicafe.com/pblog/?p=610
      What IF they refuse to loan US the money? Then what?

    2. Jamey, Central Calif says:

      Obama's policies rely on the assumed premise that I as an American will continue to do my "patriotic" duty and pay taxes. What happens when the burden is too great, and people quit. There is a pivot to how far a person will work to the proportion that the same individual is compensated. Once a person has no discretionary income left, what is the point to keep working? Not only from the taxable income side, but as one finds that you have less and less discretionary income to spend, you start cutting back purchases . Now the retail market (can we say state taxes) gets less. Know body is this stupid. He CAN'T be doing all of this by accident. There is a purpose to it all but to what end?

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