Plans to cut debt have failed nearly everywhere I look.
- Greece is obvious enough and a government collapsed over it.
- Spain is obvious enough and a government collapsed over it.
- Italy is obvious enough and a government collapsed over it.
- Portugal is obvious enough and a government collapsed over it.
- US is obvious enough and the failure of the super-committee to come to agreement is proof enough
In the UK, news is just as “reassuring” as Prime Minister David Cameron says “Our Plan to Cut Debt is Failing“
David Cameron and his senior ministers have admitted for the first time that there is a danger they will not be able to tackle borrowing on time.
The Prime Minister on Monday conceded that tackling Britain’s debts was “proving harder than anyone envisaged”, raising the prospect that the Coalition would be unable to close the deficit by 2014-15.
That would rule out any significant tax cuts before the next election. It also raises questions about the Coalition’s fundamental purpose.
Departing from the deficit-reduction timetable could raise fears that Britain will face rising borrowing costs as bond markets take fright.
Debt is “a drag on growth”, Mr Cameron told business leaders. “We are well behind where we need to be,” he said.
Kenneth Clarke, the Justice Secretary, has warned that the global economy is “in a devil of a mess”, which is “bound to have an effect” on the Coalition’s plans to clear most of the deficit before the next election.
The candid remarks pave the way for George Osborne, the Chancellor, to admit next week that his target will be missed and the structural deficit will not be erased until at least 2015-16.
The odds Cameron will succeed by 2016 are the same as the odds he would succeed by 2014. Zero.
At least the UK admits failure. In the US we have a situation best described as Mission Accomplished: Nothing; Kerry Says No Problem “Lawmakers Have a Year”; Boehner’s, Pelosi’s “Moral Obligations” Fly Out the Window
Mission a Brilliant Success, Achieves 100% of Its Goals
The Super Committee accomplished nothing, as expected, and more importantly, as designed. Neither political party really wanted to do anything about the deficit (because it would cost them votes). By D.C. standards this mission was a “brilliant success”. It achieved its purpose, which was to do nothing. Both parties got the smoke-and-mirrors delay they wanted, while pointing fingers at the other side.
One Success Story
Those looking for a success story can find it in Iceland. It truly is different in Iceland because Icelandic citizens were actually give a chance to vote on what to do, and vote they did against the wishes of parliament, to tell the IMF and EU to go to hell (twice I need to add, because incompetent politicians were hell-bent on stopping default following the first vote).
Iceland defaulted. The result has been spectacular. Iceland is well on its way to recovery.
Meanwhile, PIIGS flounder around like fish out of water, shoved bales of austerity and ordered by outsiders and unelected officials to breathe.
The current situation is hopeless. Politicians either need to accept that fact, or put things to a vote like Iceland did.
Serious restructuring and a breakup of the Eurozone is the only solution.
Mike “Mish” Shedlock
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