Ireland: The Sound of One Domino Falling

Economist/Professor Peter Morici speaks and emphasizes the obvious: just as with families and businesses, countries simply cannot "live beyond their means."

Translated: spending cannot exceed revenue. Or there is a problem.

In his article "Double Dip Or Off The Cliff" Dr Morici writes:

Dr. Peter Morici: US Economy; A double-dip or off the cliff? The US economy has had two crises that were followed by long periods of depressed economic activity, high unemployment, and instability lasting more than a decade—the Panic of 1873 and the Crash of 1929.

Conditions are emerging that could cause that to happen again, and without a radical change in policy, the nation is at risk of a terrible calamity.

Now faltering retail sales, jobs creation and consumer confidence, and stubbornly high new unemployment claims, indicate the economic recovery may be quitting.

If the economy goes down a second time, now, its resuscitative qualities will have been spent when government deficits can’t be much increased, and the Federal Reserve can’t further cut interest rates.

If the economy goes down a second time—for example, GDP declines significantly two quarters in a row—then it likely goes down for good. Unemployment would rise into the teens, and the economy would sink into a depression—a deep and painful slump from which it cannot soon recover.

President Obama’s policies are not helping.

More than one trillion dollars in stimulus was squandered, creating few jobs, and the President’s spending commitments are not proving temporary. Instead, federal finances are burdened by indefinite annual deficits exceeding one trillion dollars—much worse than when George Bush left office.

Obama’s health care reforms are long on mandated benefits and short on cost controls. This combination is raising insurance premiums for businesses and individuals, forcing state governments to increase taxes or trim other programs, and discouraging businesses from hiring.

The President touts green industries to radically reduce petroleum use and seeks to end much offshore drilling, but experts familiar with alternative energy technologies realize that windmills, solar panels, and converting crops to fuels won’t appreciably reduce petroleum use for decades. Either Americans develop more domestic petroleum or pay dearly for more foreign oil.

Financial reforms moving through Congress will impose costly new regulations that raise the cost of credit, create few meaningful consumer protections that are not already being implemented by the Federal Reserve, and leave the biggest banks largely free to continue speculative activities, controlling an even larger share of the nation’s deposits than before.

Big banks remain too big to fail and are becoming more dangerous.

Smaller banks are cash starved and burdened by assets made toxic by the crash—for example, mortgages on shopping malls that have too few customers.

China’s purposely undervalued yuan makes its products much cheaper on US store shelves than its labor cost advantage require, destroying millions of US jobs. China has rebuked diplomatic efforts by President’s Bush and Obama to change this policy.

President Obama should counter Chinese protectionism and abuse of free trade with a tax on dollar-yuan conversions that raise prices of Chinese imports to their true cost to the US economy.

A Savings and Loan Crisis era Resolution Trust could relieve regional banks of troubled loans, earn a profit for taxpayers, and give small and medium sized businesses adequate bank credit again.

Much of this runs counter to President Obama’s progressive principals but hard realities, not utopian dreams, must dictate the decisions of a leader or his nation fail.

On this I would care to now chime in. And I would refer you to the acronym PIGS: Portugal, Ireland, Greece and Spain.

The countries in Europe that are failing mightily.

Ireland will down first. And how goes Ireland, will so go the European Union or EU.

As in the states: as goes Fornicalia, will so go the United States.

And no one is paying attention.



You cannot spend your way out of an economic crisis. Conversely, you cannot print your way out of an economic crisis.

Eight words that explain everything:

You simply have to live within your means.

Translated: spending cannot exceed revenue. Or there is a problem.

In re: only 1/4th of the electorate thinks Mr Obama will be re-elected. DC Elites think otherwise.

China continues to buy more US debt.

Can't you, please, put this all together, people?

Are you that blazingly stupid?

BZ