The needed EU Austerity creates the coming second dip

Spending cuts, tax hikes in UK emergency budget focused on cutting record national deficit
Published June 22, 2010 | Associated Press
www.foxnews.com...

...Everyone in Britain will feel the strain, he said, from shoppers paying higher sales tax, wealthy people hit for higher capital gains taxes, banks targeted by a new levy and even Queen Elizabeth II — who accepted a freeze in her support from taxpayers....

June 23, 2010, 6:40 p.m. EDT
G-20 unity fades along with global crisis
Leaders will spar over deficits, bank rules and global rebalancing
www.marketwatch.com...

JUNE 23, 2010
Osborne's Anti-Keynesian Budget
Another government abandons the idea that it can spend its way back to prosperity.
online.wsj.com...

...George Osborne presented the U.K. government’s emergency budget yesterday, with spending cuts and consumption-tax hikes intended to shrink public borrowing to 1.1% of GDP by 2016, down from 10.1% of GDP this year. Nearly 80% of that retrenchment comes as spending cuts rather than tax increases. The Chancellor of the Exchequer’s cuts are, on balance, good news for the British economy. Even more welcome, though, is that Mr. Osborne’s budget is the latest to depart from the short-lived Keynesian consensus that government can spend its way back to prosperity.

…Over the past year, politicians around the world claimed they couldn’t cut spending without killing the economy, even as fiscal deficits soared to record highs in the developed world. Call it the spendthrift’s paradox.Now the tide may be turning. U.S. President Barack Obama could find himself in a lonely spot at this weekend’s G-20 summit, when he’s expected to urge his counterparts not to tighten fiscal policy too quickly lest they thwart their economic recoveries....

We knew that spending doesn't make the poor wealthy. Even poor governments can't spend their way into prosperity. Spending has to stop. Governments, corporations, and individuals are tightening the belt, you know what that means. A second dip is coming. So prepare yourself. Sell what you don't need (if you can find buyers). Prepare for it. This is what the doomsayers saw coming, the buy land, move to the hills guys. They were not worried about the short term crash, they were worried about the long term change. Todays' 'new normal' economy is temporary and artificial. The next austerity phase is necessary, and healthy.

Please share the austerity philosophy with the current administration. While others are tightening Obama wants $50 billion more to throw around.

Now that the homebuyer credits have expired we are seeing the truth behind a market that was falsely propped up by useless spending. New home starts are in the dumps and existing home sales are slipping along with home values.

The cash for clunkers program gave false hope to dying car brands and failing business models.

What's next? None of these programs have helped me or others in my realm of the Middle Class. We work too hard and make too much money for any relief. We pay the nation's tax burden and keep the local economy alive.

Oye!!

The current economic situation is one messed up scam to create a delay.. no other word for it really... the bailouts brought the elite time... if they had brought time to implement some form of wealth creation, then that would be fine.. and we would be on our way to paying down the debts while spreading the pain over the new jobs/industry, but they didn't create wealth, no new jobs or industry, just printed money to go on big corps balance sheets.

The issue I see is that if we continue down the austerity path or continue to bailout, both avenues lead to the same end and the longer the bailout the harsher the austerity and the deeper internal discontend and dissent it will cause. But the end result is the same.. deep discontent.

Now cutting the public sector jobs and slashing budgets is fine but when you have no serious wealth creation where are all those public sector people going to go? how will the private sector deal with those budget cuts? all that is going to happen is more and more people losing what little they have now.

Without wealth creation the existing unemployed and under-employed have no chance of get out of the debt/benift traps, which will only get worse as those benifts are cut back further and futher, while the Gov themselves face an ever dwindling taxable group. With no hope of getting out of the mire they are stuck in.

With deep discontent comes trouble which places the elites necks on the block, which I really really do not think they will do.

My personal opinion at the moment is the elite brought themselves time to set up an external conflict... and use the military industrial complex to paydown the national debts that are not wiped.

I keep asking myself, What other choices have they left themselves if they are not going down the wealth creation route??

[edit on 24/6/10 by thoughtsfull]

Originally posted by jibeho
Please share the austerity philosophy with the current administration. While others are tightening Obama wants $50 billion more to throw around.

Now that the homebuyer credits have expired we are seeing the truth behind a market that was falsely propped up by useless spending. New home starts are in the dumps and existing home sales are slipping along with home values.

The cash for clunkers program gave false hope to dying car brands and failing business models.

What's next? None of these programs have helped me or others in my realm of the Middle Class. We work too hard and make too much money for any relief. We pay the nation's tax burden and keep the local economy alive.

Oye!!

First off I love your avatar, it is awesome!

Second, I agree with everything you say. Spending your way out of debt is imposible! think of it this way. The goverment spends $100 to hire a contractor to fix a road. The road is fixed and now the contractor pays taxes on his income, lets say 50%. now the goverment has $50 left. We now have a nice new road that is not making money and the goverment lost 50% spending its money. Thats best case. Any Thoughts?

The other 50% will come from the Taxpayer, plus more to take care of 'overhead'. That's why Dollars are backed by the full faith of the U.S. Taxpayer. Taxpayers always have more money in their paychecks. What, is the family going to make angry calls to the I.R.S. that the take-home their Dad worked for keeps shrinking?

Originally posted by Dbriefed
The other 50% will come from the Taxpayer, plus more to take care of 'overhead'. That's why Dollars are backed by the full faith of the U.S. Taxpayer. Taxpayers always have more money in their paychecks. What, is the family going to make angry calls to the I.R.S. that the take-home their Dad worked for keeps shrinking?

I predict that there will be a further radicalization of the common American.

There has been a move for ages, and i bet it will continue to grow, that says the IRS is unconstitutional, as is our tax code. Expect it to go away, if we can wrestle our country back from the parasites.

Thought I add my two cents to this while I have it Seems the Romanian people aren't exactly thrilled about austerity measures. AP is reporting that around 600 Romanians just attempted to storm the Presidential Palace. Coming soon to a capital near you.

Hundreds of Romanians Storm Presidential Palace