Sovereign debt bubble thread

[KRonn]

Canada's budget deficit is shrinking and it is claimed on target to be eliminated by 2014.


http://www.theglobeandmail.com/news/politics/ottawas-deficit-shrinks-as-world-economies-struggle/article4444087/

Can you please have some of your politicians give lessons to some of ours in the US??

[crazy canuck]

Canada's budget deficit is shrinking and it is claimed on target to be eliminated by 2014.


http://www.theglobeandmail.com/news/politics/ottawas-deficit-shrinks-as-world-economies-struggle/article4444087/

Can you please have some of your politicians give lessons to some of ours in the US??

You need fundamental change.

[KRonn]

Canada's budget deficit is shrinking and it is claimed on target to be eliminated by 2014.


http://www.theglobeandmail.com/news/politics/ottawas-deficit-shrinks-as-world-economies-struggle/article4444087/

Can you please have some of your politicians give lessons to some of ours in the US??

You need fundamental change.

We have enough fundamentalist pols on the left and right. We need what Canada is doing.   

[Admiral Yi]

We have enough fundamentalist pols on the left and right. We need what Canada is doing.   

Politicians largely reflect the will of the electorate.  As long as the American public is in denial about the deficit our government is not going to do much about it.

[Sheilbh]

We have enough fundamentalist pols on the left and right. We need what Canada is doing.   

Politicians largely reflect the will of the electorate.  As long as the American public is in denial about the deficit our government is not going to do much about it.

I think a lot of this depends on how people talk about things and how sterile political debate is. 

The US deficit has fallen by around the same amount as a % as the UK deficit since the crisis.  The effect's the same but because of how the argument/debate is in our countries you have a do nothing government, while we have a government whose 'central mission' is to reduce the deficit.  In your debate we're used as an example austerity (gone good or bad depending on whose side you are) while here you're the example of what we should be doing rather than this destructive austerity plan.

Personally I'm with Cheney, I don't think deficits matter.  I think the medium to long-term costs matter far, far more and they're rather more difficult to deal with.

[Admiral Yi]

That's a seperate issue than what I was thinking of Shelf.  At the risk of generalizing, in the US the left thinks the deficit disappears once you raise taxes on fat cats, and the right thinks it disappears once you cut Public Radio and food stamps.

[Sheilbh]

That's a seperate issue than what I was thinking of Shelf.  At the risk of generalizing, in the US the left thinks the deficit disappears once you raise taxes on fat cats, and the right thinks it disappears once you cut Public Radio and food stamps.

I think it's even worse on the left.  They don't want to raise taxes on the rich to cut the deficit, they want to do it just because.  I could support that idea if it was to cut the deficit.  As it is I think it's one of the least attractive features of the left in the US.

I'm with you on the right though.  Romney's fiscal plan is awesome in its dishonesty.  You can raise the DoD budget enormously, cut taxes hugely (and not even through revenue neutral reform) and somehow the deficit will just disappear

[KRonn]

The President and both parties need to speak about getting spending under better control, do it together, rather than each side bashing each other for political gain for every idea and proposal. Of course that won't happen. Meanwhile we have some serious warnings by objective people regarding the entirety of the issue from the economy to devaluation of the dollar. 

[Neil]

You know, I wonder if Republican candidates actually believe that increasing public spending and lowering revenue is good for the economy.  I make a point of not attributing to malice what can be explained by stupidity, but sometimes you have to wonder.

[KRonn]

You know, I wonder if Republican candidates actually believe that increasing public spending and lowering revenue is good for the economy.  I make a point of not attributing to malice what can be explained by stupidity, but sometimes you have to wonder.

This sounds more like the view of Democrats, though I wouldn't put this kind of tag on either party to be fair.

[Zanza]

http://www.economist.com/node/21559636

Charlemagne
Euro EUphemism
François Hollande is trying to wriggle out of Germany's demand for more political union
Jul 28th 2012 | from the print edition



FRANCE'S political discourse these days is rich with euphemisms. The words austérité or rigueur are shunned, though everybody knows that spending cuts must come soon. Instead the government of François Hollande prefers to speak of redressement, or "putting right" public finances. And when it comes to the euro crisis and Germany's demand for greater political union, Mr Hollande responds with the artful phrase: intégration solidaire, or integration with solidarity.

Precisely what Mr Hollande means by this is as important to the future of the euro as Germany's willingness to accept further risk-sharing. The euro zone is descending into the next circle of misery, with investors fleeing Spain and the mess in Greece returning to the fore. Above all, markets have lost confidence in the future of the single currency. The task of political leaders is to prove that they intend to keep it.

So Germany is being urged to stand behind the euro by accepting the pooling of sovereign debt and collective action to shore up the banking system. Angela Merkel, the German chancellor, says that if there is to be any mutualisation of liabilities, there must be greater central control. That means giving European institutions more power to determine national budgets and economic policies, and to oversee the financial sector. And such power must be legitimised by democratising EU bodies and strengthening the European Parliament.

How does Mr Hollande respond? Surrendering sovereignty is hard for any government in France, with its tradition of a powerful centralised state. Under the Fifth Republic the president enjoys ample discretion. The notion is particularly painful for Mr Hollande, whose Socialist party was split in the 2005 referendum on the EU's constitutional treaty, rejected by French voters. As party leader, Mr Hollande, a declared pro-European, had supported the treaty. But senior party figures campaigned for a no vote, and Mr Hollande did not dare expel the rebels. Indeed, he has appointed prominent nonistes to his government: Laurent Fabius, a former prime minister and rebel figurehead, is now foreign minister. Another noniste, Bernard Cazeneuve, serves as minister for European affairs.

Mr Hollande wants to avoid a real discussion. "Nobody has explained to us what political union means," say his lieutenants. They argue that any big EU institutional change would require a referendum in France; and it would almost certainly be lost, given the mood of discontent. It would be better to wait until the crisis is overcome. In any case there is a limit to European integration.

"The French people will never accept that France would just become a region of Europe," says one Elysée source. Political integration for the sake of fiscal discipline could never be sold; it needs a big projet to grab the popular imagination. Veteran nonistes, such as Marie-Noëlle Lienemann, a Socialist senator, say they do not object to more European integration as such, but dislike the EU's quest to promote internal competition and the German obsession with fixed economic rules. Why should the rest of Europe pay for the German connerie of hyperinflation in 1923? Instead she wants greater convergence of social policies across Europe. It is high time there was a European minimum wage to stop factories moving to low-wage EU countries.

It is hard to tell whether Mr Hollande feels discomfited. In a sense he invited Germany's call for political integration by publicly pushing for joint Eurobonds. Unlike his predecessor, Nicolas Sarkozy, Mr Hollande is happy to make public his disagreements with Berlin. After the Merkozy era, he wants to show that he and Mrs Merkel "sleep in separate bedrooms", says Thomas Klau of the European Council of Foreign Relations, a think-tank.

Mr Hollande may also be holding out for the 2013 elections in Germany, when Mrs Merkel may be forced into a grand coalition with the Social Democrats, Mr Hollande's allies. Yet France is not best placed to play the waiting game. Its borrowing costs may still be low, but France is more vulnerable to the crisis than Germany. After Spain and Italy, France may be next in line.

Chicken and egg

There is a circularity about the argument across the Rhine. Germany wants control and political integration before more solidarity; France wants solidarity before integration. Both may be politely saying no to each other. Or they may conceivably be working out a grand bargain. In practice, Mr Hollande is more likely to try to seek a succession of smaller deals, each with a bit of chicken and a bit of egg, and avoid a revision of the treaties for as long as possible. If Eurobonds are impossible for the moment, say officials, then perhaps one could start with some short-dated bills, limiting the size and duration of the liabilities.

The latest European summit reveals some of this thinking. The euro zone agreed to set up a single supervisor for banks, which is less contentious than scrutinising governments. Thereafter European rescue funds should be allowed to inject capital directly into ailing banks, so sharing the burden. The markets' hope that this would help Spain was short-lived, as the details remained vague and leaders bickered over whether Spain would remain on the hook for bank losses. Without an agreed destination, all sides fear the precedent that each step may create.

For now, both France and Germany are reluctant to take the measures needed to create a coherent and stable euro zone. The worsening crisis may well push them, grudgingly, to take more half-steps. But a reluctant union is unlikely to be credible or lasting. So when he talks of intégration solidaire Mr Hollande cannot speak only of solidarity. He needs to say what sort of integration he is prepared to envisage. The euro crisis is a moment of truth, not only for Germany but for France as well.

[Crazy_Ivan80]

typical for the frenchies: always asking for other people's money but never reciprocating.

[Barrister]

You know, I wonder if Republican candidates actually believe that increasing public spending and lowering revenue is good for the economy.  I make a point of not attributing to malice what can be explained by stupidity, but sometimes you have to wonder.

Well I have heard the "reasoning" that doing so will promote a crisis which will be the opportunity to massively and permanently shrink the size of government.

[MadImmortalMan]

That sounds a bit conspiracy theory to me. I wouldn't apply malice where incompetence is a perfectly reasonable explanation.

[KRonn]

You know, I wonder if Republican candidates actually believe that increasing public spending and lowering revenue is good for the economy.  I make a point of not attributing to malice what can be explained by stupidity, but sometimes you have to wonder.

Well I have heard the "reasoning" that doing so will promote a crisis which will be the opportunity to massively and permanently shrink the size of government.

I've also been hearing the conspiracy theory that if the US keeps spending hugely, while keeping the economy sputtering, financial markets continue to hurt, then a much bigger crash will occur, eroding faith in Capitalism to a point that uber lefties can more easily put in place ideas for more government control and dependency. Something like that. Not saying I buy into it, just more conspriacies going around.

So if both sides are actually working to their respective conspiracies, then I guess we're kind of screwed!