Commenting on Krugman's post about fiscal stimuli I simply argue that the difference between UK and US is that UK is in the European Union not the United States...We imported the financial crisis from United States as an external shock to the EU economies. EU citizens still wonder how and why they got involved in this financial crisis and Ponzi's scheme made in United States. In the EU there is a Stability Pact which puts some obstacles, not only legal.
A plan has not to be big to be good. If one really wants to make it big at least should make also plans to pay the debt back. This is what United States has never done it, in private and public spending. Should it start now?
Are we sure that "the UK apparently faces much tighter constraints from the bond market, which is reacting negatively to news of the likely deficit increase in a way ours isn’t? I wonder if United States will never feel or have such a constraint from the bond market. Let's see next year. At a time when all countries will run on fiscal stimuli while being in deficit and public debt, there will be some kind of competition in the bond markets for scarce resources. Spread on treasuries (for instance against german bund) will be higher for high deficits and debt countries. This is already happening in Europe between italian and german bonds. What United States will do if its treasuries are going into default or some auctions go unsubscribed (it has already happened in the EU)?
Just make a plan in case or at least tell the market how the debt is going to be paid back.
Tuesday, November 25, 2008
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3 comments:
The debt is too big to be paid back, at least by ordinary Americans and their taxes. We cannot pay it, we will not pay it.
Please see the distinction between banks and investment banks located in the USA, and the US taxpaying citizens. The latter had no control, zero, over the former. The banks ran up debts within our system that nobody could pay back.
We won't pay it. Maybe you can get the banks to pay it. Or we can inflate the debt and still pay it, but of course in devalued dollars.
EU citizens still wonder how and why they got involved in this financial crisis and Ponzi's scheme made in United States.
It's called greed, as evidenced by a significant numbers of the countries in Europe have ever bigger housing bubbles than the US.
A housing bubble per se would be just a housing bubble (from which we could come back in Europe), but if you build derivatives, CDS, ABS, etc. on top of it and lever it 40 times it's a financial crisis!!! That's made in U.S. and greedy europeans have just invested on it in the Ponzi's chain.
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