We are soon going to find out that today’s bailouts are tomorrow’s spending cuts. (Source)
As Always: In order to allow foreign bankers and speculators to recoup their ill-advised investments in Greece, the EU is imposing severe austerity measures that fall mostly on the poor and will worsen the recession already underway. Inexplicably, the unions representing about half the country’s workers have called for strikes to show their displeasure at lower pensions, extended retirement age, lower wages and fewer social services.
Meanwhile, in USA: Rep Paul Ryan (R-WI) the top GOP member of the Budget Committee wants to cut Social Security, Medicare, Medicaid, Defense(!) plus privatize Medicare, increase taxes on the bottom 20% of citizens by 12.3%, decrease taxes on the richest 1% by a whopping 15%, send a few hundred billion to for-profit insurance companies and calls the whole thing a tax cut. Tax cut – where 90% of the population pays more taxes to receive less services. (Source)
Moody’s Blues: Moody’s says that the reduction in government spending, increases in taxes and cuts to social programs will involve “substantial execution risk.” By which, they rush to explain, they mean merely riots, not revolution. (Source)
Some say it’s a pity that we now have to institute austerity measures for the masses, but the bailouts were necessary.
Did bailouts for billionaires “fix” the crash?
Everyone with three functional synapses and an opposable thumb knows that we are headed into a second great depression. (Source)
Want evidence? Ponder this chart . . .
Or, consider that:
So, where do we go from here?
Either we’ll have hyper-inflation with relatively little new borrowing, which will rapidly increase the size of GDP while holding the debt load steady. OR we’ll have gradual growth of GDP [austerity measures] combined with a gradual reduction in debt.
Neither will be a particularly happy outcome, though the level of unhappiness in each scenario will vary depending on your circumstances.
- If you have a job and owe a boatload of money, root for hyperinflation: It will make your salary go up fast (in nominal dollars) while your debt load stays the same.
- If you’ve saved a bunch of money, root for slow growth of GDP [austerity measures] and gradual debt deduction: This will preserve the value of your hard-earned savings. (Source)
Which path is more likely? Just ask yourself which path you’d choose if you were a billionaire with millions to spend on lobbying — and there’s your answer.
The total wealth owned by the 358 richest people in the world, the dollar billionaires, is greater than the annual income of almost half the world’s poorest inhabitants, in other words about 2.6 billion people. (Source)