Ambrose Evans-Pritchard—Flee to Mars if America commits worst error since 1931

Posted by Kendall Harmon

Should America embark on such fiscal contraction at a time when economic growth has already slipped to stall speed, and debt deleveraging continues with a vengeance, I would like to flee to Mars for safety.

Yes, there is such a concept as an “expansionary fiscal contraction”, as in Ireland (1980s), Denmark (1990s), arguably Canada (1990s), and the UK after both 1932 and 1993, but in every successful case this was accompanied by monetary loosening. That card has already been played this time.

Should America instead opt to evade these fiscal cuts by actually defaulting on debts accumulated by self-indulgent baby boomers, I would also like to flee Mars because such an outcome might be even worse.

Read it all.

Filed under: * Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--The U.S. GovernmentBudgetFederal ReserveMedicareSocial SecurityThe National DeficitThe United States Currency (Dollar etc)Treasury Secretary Timothy GeithnerPolitics in GeneralHouse of RepresentativesOffice of the PresidentPresident Barack ObamaSenate* International News & CommentaryAmerica/U.S.A.

Posted July 27, 2011 at 12:43 pm [Printer Friendly] [Print w/ comments]

1. Br. Michael wrote:

If failure to raise the debt limit were that serious Obama wouldn’t threaten to veto it.

Regardless Boehner’s plan is all a farce.

1. Once again we don’t have a cut, only a reduction in the rate of spending increase.

Two. The planned reductions will never happen because the politicians in office on the day of reckoning will not take the heat. Nothing done today is in anyway binding on the Government 10 years out.

Three. To always raise the debt ceiling is to admit that it will always be increased and that it is no limit at all. Better to do away with it.

Fourth. This is an admission that we cannot control our spending. It reaffirms the Wimpy principle: “I will gladly pay you Tuesday for a hamburger today.”

Fifth. This is not about electing Republicans. It is about saving the country and I have no interest in a Democrat lite plan or a Democrat lite Republican.

Sixth. If the debt is not really worth dealing with (and this plan says that it is not) let’s spend like there is no tomorrow and run the printing presses and shower everyone with billions of dollars.  If our overspending is a problem let’s deal with it, if it is not then lets all go to the beach.

July 27, 2:10 pm | [comment link]
2. Jim the Puritan wrote:

I don’t know when it is going to soak into folks’ brains.  This whole episode totally lays it out. 

The problem with the economy is not the economy.

The problem with the economy is the government.

July 27, 3:55 pm | [comment link]
3. Capt. Father Warren wrote:

The problem with the economy is the government  and by extension of course, the people who elect the Government.

We have lived beyond our means [$14T worth].  None of the plans being debated in Congress cut anything; they either slow down future spending [if adhered to by the way] or they are smoke and mirrors.  So we are set to pile another $6-10-12T of debt on top of where we are in the next 10 years…........either because investors will continue to buy our debt, or, because the Fed buys our debt, ie, monatizes it.

Either way it does not turn out well.  I again suggest reading “Patriots” by James Rawles.  Probably not the future any of us who truly love this country are looking forward to.

July 27, 4:07 pm | [comment link]
4. Jim the Puritan wrote:

I just find it incredible there hasn’t been a peep out of the entire congressional delegation from our State throughout this entire fiasco.  I think they know the house of cards is going to collapse and they want to pretend they were not there when it came down.

They do continue to issue the regular press releases about there being millions of dollars for this farmer assistance fund in our state, and that much to subsidize shipping costs, and that much for encouraging green industries.  It just sounds like so much of a farce at this point.

July 27, 4:12 pm | [comment link]
5. Sarah wrote:

RE: “Should America instead opt to evade these fiscal cuts by actually defaulting on debts accumulated by self-indulgent baby boomers, I would also like to flee Mars because such an outcome might be even worse.”

Anyone at all who’s been keeping up with this knows that we’re not going to default on our debts unless, of course, the current leaders *decide* to default on our debts.  Our *current revenue* allows us to service the debt, pay SS, pay Medicare/Medicaid, pay our Armed Forces, and have several billion left over.

So failing to raise the debt limit would work out just fine—and of course, it would be a *forced* balanced budget too!

July 27, 4:44 pm | [comment link]
6. Jim the Puritan wrote:

As the saying goes, it’s time to wake up and smell the roses.  We may as well do it now, it’s not going to get any better.

July 27, 4:46 pm | [comment link]
7. Capt. Father Warren wrote:

failing to raise the debt limit would work out just fine—and of course, it would be a *forced* balanced budget too!

Amen!  Forget Balanced Budget Amendments and all the other things that Washington DC pols can find a way around.  Hitting the debt limit and not raising it would be strongest budget medicine we will ever see.  And you notice not one person in Washington says a peep about it because they are all scared of it.

With a maxed out credit card the pols would have to do what all of us do every month… the bills and then prioritize what we spend the rest of our disposable income on.  That would be leadership…..being a binge spender is not leadership, it’s destruction of America.

July 27, 5:04 pm | [comment link]
8. BlueOntario wrote:

If you want to flee, bring your passport and renminbi. It’s not very likely you will get to Mars on an American rocket.

July 27, 8:05 pm | [comment link]
9. Capt. Father Warren wrote:

Want to see your taxes put to good use?

July 27, 8:09 pm | [comment link]
10. BlueOntario wrote:

Capt. Deacon Warren, don’t leave out the back story. The original space station proposal under Reagan was for the US to build and occupy Space Station Freedom. When Congress balked at the cost it went international. Bush II was going to end US involvement in ISS in 2015 or so and end the Shuttle program in 2010 to free up money to return to the moon with plans for a permanent base for exploration beyond earth orbit under the Vision for Space Exploration plan. Obama canned VSE and the moon rocket under development to free up money for education. He also extended ISS partnership to 2020 and hopes to turn over supply and remanning missions to subcontracted commercial launchers when or if they are available. Obama also wants to go somewhere, sometime, but doesn’t have any goal or deadline on concepts.
Congress has been asking for something a little more concrete from the administration for the past two years without an answer.

July 28, 12:45 pm | [comment link]
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