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Guest Post: America The Reckless
Authored by Michael Spence, originally posted at Project Syndicate,
The world’s developed countries face growth and employment shortfalls, while developing countries are confronting huge challenges in adapting to increasingly volatile capital flows while adjusting their growth patterns to sustain economic development. And yet America’s political dysfunction has come to marginalize these (and other) crucial issues. It is all very difficult to fathom.
The threat of a default on US sovereign debt has been lifted – for now – but the deeper problem persists: For America’s Republicans and Democrats, negotiating a fiscal grand compromise appears to carry higher costs than playing a game of brinkmanship, even at the risk of default. Surely this involves a collective miscalculation of the longer-term costs.
Setting aside the external impact on the global economy, the damage to domestic stability and growth from anything other than a short-term technical default would be so severe that the political system (and both parties with it) could not withstand the backlash. Domestic and foreign holders of US Treasury bills would regard a deliberate, unforced default as a betrayal of trust.
Some are reassured by this fact, because it suggests that a real default will not happen. And that means that the fragile global economy, dependent (for now) on a single country for its main reserve currency, can withstand America’s political shenanigans.
That may be true, and it may be the only practical choice in the short run. But the US pattern of decision-making (or non-decision-making) has already created additional risk. It will surely be reflected in upward pressure on interest rates, at which point the Federal Reserve will enter the picture.
Far from tapering its monthly purchases of long-term assets, one can easily imagine a scenario in which the Fed’s already substantial balance sheet would have to expand even more quickly to counter the negative economic effects of an unplanned – and rapid – rise in borrowing costs. And this comes at a time when many (including me) believe that strengthening US economic growth makes an orderly withdrawal from policy-assisted growth the wise course, both domestically and internationally.
Outside the US, even a technical default would have profound effects. The eurozone still faces rebalancing and structural challenges, but it has managed to create a window of stability in sovereign-debt markets. In the case of a US default, however, it would start to attract capital inflows, causing the euro to rise, adding to already-substantial headwinds to growth and employment, and making recovery in its damaged peripheral economies nearly impossible. Measures to counter “excessive” capital inflows – of the type introduced in Brazil and Malaysia – might be needed.
China and other sovereign holders of US debt face capital losses over and above those implied by the inevitable appreciation of their currency. One is reminded of the external consternation expressed during the 2008 crisis at the possibility of a default on debt carrying an implicit government guarantee.
In March 2009, Zhou Xiaochuan, the governor of the People’s Bank of China, argued that the dollar’s role as the main international reserve currency was not in the interest of the global economy or of the US itself. In an expanding global economy, the supplier of the reserve currency is pushed to run current-account deficits – and hence toward a leveraged-growth model that systematically erodes its strength and independence as it becomes increasingly reliant on foreign capital and foreign asset ownership.
Now we can see that the global economy is dependent not only on the strength of the reserve-currency country, but also on its values – particularly, on its continued willingness to put critical international commitments ahead of domestic disputes. America’s governance crisis has called this into question.
The long-run effects of the US default threat will be overwhelmingly negative.
For starters, it will reinforce the notion that policies and policy disputes are to be conducted with a view to domestic issues and interests, independent of the systemic global effects – even as those effects grow larger. Indeed, some factions within the US political system do not appear to understand the large adverse feedback effects on the domestic economy from a disruption in the global financial system.
Second, external holders of US sovereign debt will almost certainly begin to view Treasuries as risky assets and, where possible, to diversify away from them. That is not necessarily bad – wholesale dumping of US sovereign debt is highly unlikely, as that would be self-destructive for many countries, including China – but the transitions could be bumpy.
Third, the willingness to hold America’s creditworthiness hostage for domestic political purposes will almost surely accelerate the decline of US influence in global economic governance and management. In the short to medium term, that decline may create a vacuum and lead to volatility and heightened risk, because, as many have noted, there are few candidates to replace the US.
To be fair, the trend toward diminished US influence – and, ultimately, shared responsibility for global economic governance and stability – was already underway, and in a sense is inevitable. The hope was that the transitions would be gradual and stable, with the US playing a leadership role as it has in most of the postwar period.
Finally, the US default risk may revive Zhou’s 2009 agenda (perhaps premature at the time) and accelerate the search for a workable alternative to the single-country reserve-currency model, which has outlived its usefulness. In the end, no one wants the global system to be vulnerable to a single country’s domestic political fights.
The global economy faces tremendous trials in the coming years: growth, employment, and distributional challenges in many advanced and developing countries; far-reaching institutional reform in Europe; the complex middle-income transition in China; and the continuing need to reduce poverty worldwide. Managing them effectively requires designing a system of global governance in which one country’s internal politics cannot jeopardize all countries’ prospects.
The immediate threat is gone. But this is no time for a sigh of relief and business as usual.
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When you accept that America is now an obstacle to the grand plan, and that the people who have taken over our government intend this reckless course for a very specific reason, it all comes together. All of the cognitive dissonance (with hats off to the poster of that handle) goes away when you accept that it is intentional.
Edit: or perhaps it is a coincidence that a few thousand people are making hundreds or thousands of billions of dollars from these "mistakes" in policy.
America The Corrupt System to Its Core
Every dickhead in DC thinks they are exceptional. It's all downhill from there.
You are already exceptional before you've earned it. What's more to this self-aggandizement ! Just look at the standing ovation given to Boner. That says it all.
But they are exceptional; they were able to get a job doing very little, with exceptional benefits, and an exceptionally good retirement plan.
All they have to do in return is screw up everything they touch, and sell out the United States at every turn and they are a shoe-in for re-election.
The standing ovation was nothing more but the usual ass kissing. Most politicians are the ass kissing slimeballs. This is how they advance in politics -- by kissing the asses of "right" people (unless you are a women or gay, then you can give a memorable blow job; e.g. Nancy Pelosi giving a blow job to Tip O'Neill or Monica Lewinsky to Bill Clinton).
The House Of Clapping Seals,
(No insult to seals intended)
Corrupt to the Common Core.
@ Cult of Reason,
"America The Corrupt System to Its Core"
"America The Criminally Corrupt System to Its Core"
They claim that using the legal loopholes (specifically designed for the bankers and uber rich to rob and enslave the middle class) is not criminal.
Hello? Did someone mention my name? :)
One only need to take a gander at (ancient and modern) history to see that often (and possibly every time) that the empire has been driven off course, not unintentionally or recklessly drifting off course.
And the heirs of those who drove past empires off course are still guiding this one right off the rails. The Founders of this nation stood up to those fuckers and they had to lay low for a while. But they are back.
So often when I hear or read so called debunkers claim that it is silly to think that any one individual or small group of individuals can exert precision and control in their efforts to micromanage the world. Thus any notion of "control" is wrongheaded and delusional.
Of course such an argument is a red herring because micromanaging isn't required.
The herd does not need to be micromanaged in order to graze, groom or gather. All that is required are occasional nudges this way or that and the herd does the rest. The herd micromanages itself quite well thru its own self interest pursuits.
The plantation slaves are quite happy taking care of themselves. All that is needed to manage their behavior is a good old fashioned beating now and then. Or financial crisis/war/genocide.....as the case may be.
Steve Jobs and Bill Gates are household names, but Rothschild is not. All three changed the world. Yet the latter could buy and sell the former. There is still a Queen of England. There is a Saudi Royal family that could crush the dollar tomorrow. People don't see it but it's there.
By the way, the Rothschilds even use an Eagle and stars on their website. http://www.rothschild.com/usa/
Precisely. Socialism/communism was invented by these elites. Nazism was actually invented by Hollywood. Basically, evil needs camouflage in order to deceive. Many things which appear on the surface to be "doing good" are really just masks for evil.
Nazism was not invented by Hollywood. But in any event, from the Rothschild website:
"Rothschild’s long history of working with governments dates back to the origins of our firm more than 200 years ago.
We are widely regarded as the adviser who best understands the needs of governments and the benefits of a discreet, long-term relationship.
Governments trust the high calibre of our advisory expertise and the impartiality and independence fostered by our pure advisory business model. We have been engaged by many government clients for assistance with a great variety of challenges.
Rothschild was instrumental in the privatisation programmes of the 1980s in the United Kingdom, which were forerunners of a worldwide trend. Likewise, at the height of the recent global financial crisis, a significant number of governments turned to us for our expert and trusted advice on recapitalising and restructuring a range of stricken industries, including the banking sector in Europe and the automotive industry in the United States.
Rothschild also assists governments with financial divestments and complex auction processes. We advised the Government of India on its US$22.7 billion auction of 3G and BWA spectrum and, in Australia, we advised the Queensland Government on its US$17.6 billion Asset Sales Programme."
http://www.truthcontrol.com/adolf-hitler
http://www.youtube.com/watch?v=eynHqvaEyuU
I don't remember exactly where, but I think heard Jordan Maxwell mention that Hollywood gave birth to the idea of Nazism. I don't remember the source and could well be wrong.
Funny, I've been posting here for years and post quite a bit and you only appear when I call out the Rothschilds (your employer?). And your basic message is that Nazism was invented in the USA. Hmm. And I like the nice old lady image to suggest that you're just a nice old lady. Why not just use a picture of Buffet eating ice cream?
Only because of the topic of the Rothschilds is why I replied. I'm on your side, that is against them. There is an old book called "The Naked Capitalist." A good read showing the history and tracking their support/funding of the socialist/communist ideas. They use the appearances of "the greater good" or "for the people" in order to hide their true intents behind the curtain.
So the Rothschilds are fucking douchebags that should suck the short end of a gun held by a palsy patient with an itchy trigger finger, yes?
And why no one who knows and can do it doesn't just end all of tyranny by going directly after the head? Wars could end if the people realize why a gigantic waste it is to kill the other side's people when instead with perhaps a couple bullets into each side's leader would end the war immediately.
So the Rothschilds are fucking douchebags that should suck the short end of a gun held by a palsy patient with an itchy trigger finger, yes?
And the above answer wasn't a "yes" in your mind? Of course yes.
Which Rothschild would you kill first? Hypothetically.
You're asking a lot of questions here? Are you a Rothschild agent? LOL. Does it really matter? The point is to end rulers of people (tyranny) and ideally without even a shot fired. One day after people understand the need to end violence (the concept of) will then also understand the need to end having rulers (overt or hidden ones). It will no longer be a chain of obedience and suddenly without even a bullet these rulers will have lost everything.
Enjoy the ass fucking you fucking whore.
mother Teresa lost in translation?
The meek shall inherit the earth!
And Dominus and Mercator will forever be banished from our language.
What happened to man's uncertainty in the face of the unknown?
It puts the fear of the devil up his lungs yelling : Yellen! Save me by printing MOAR!
Irrational exuberance meets human predicament.
"End rulers and make the people free", I'd love to see that day arrive like a month of Sundays!
I'm afraid you don't quite get it yet (or not understand my point yet). I realize most people don't see this, at least not yet. If you understand that government IS in fact violence, how does let's say replacing one government or one ruler with another make any difference? You think that could be one reason why history has always repeated? The world we live in and have always known from human history has only been ruled by various forms and degrees of states (governments and rulers). People argue that anarchy (no rulers, not no rules) is impossible because it has never existed or has never been tried and hence they simply cannot imagine it possible. Of course you cannot imagine it possible. You have only always been exposed to the violence inherrent in statism and obviously would have no idea. And even if you tried to imagine it you are still viewing it from your preconceived statist biased experiences and history. There in lies the point and it's advantage, or at least potential. At least we know it hasn't failed like states have failed over and over again. Insanity is doing the same thing over and over and expecting different results, right? Perhaps you may want to serious consider looking deep into the non-aggression principle (NAP). NAP has everything to do with treating the people directly around you and especially those who are just born with NAP. If you cannot even affect those directly around you how do you expect to change people far away in your government or your hidden rulers? Where has any form of political action and statism gotten you? Has any election or blame game gotten your world progressively better or worse?
You might need to look more closely to that "lady's" picture. Like me previous avatar picture of a closed eyed Bernanke, this one is a closed eyed Yellen. You think she is a nice lady? LOL.
okay. Point me to your earlier posts. You've been a member for 2+ years. Show me.
To which posts? They can all be searched. That said, obviously it is typically called out as "conspiracy" to talk about these hidden world rulers which is why perhaps these posts might not appear here often. I don't remember precisely all my posts here. I'm pretty sure I have mentioned "The Naked Capitalist" as a more subtle way into this history.
That's easy, then. Just find one and post the link to it.
Eidt: crickets.
reTARD Mark 1
Fuck the Retard fucking ball gag wearing whore of his banking masters.
I think for a while his picture was Bernanke with red demon eyes...
Exactly. I don't even see how I am even coming off as defending the banking masters. I do, however, believe in ending/stopping violence (force/coercion).
He's usually spot on. PO'ed atm. Here is some good alt.history.bitch.wheres.my.money
Andrew Carrington Hitchcock presents Banksters, 1878-1919
Webster Tarpley City of London Financial Warfare, 1929-1933
Andrew Carrington Hitchcock presents Banksters, 1920-1935
USMC Major General Smedley Butler thwarts fascist plot
Andrew Carrington Hitchcock presents Banksters, 1936-1948
SykeWar Buchenwald
David Irving version of Farenheit 451
HOTT CAJI Report Treason 1/11
Benjamin Freedman speech at the Williard Hotel 1961
Myron C Fagan Illuminati 1967
Charlotte Iserbyte Dad's little black book
Yuri Bezmenov Psych Warfare Cliff Notes
Israeli Truther Miko Peled
Yes, perhaps he is just PO'ed ATM. I've read a number of his posts in the past. I know he's on mostly on the good side albeit against Rand. Rand's philosophy is pretty good even though even I don't agree with all her applications like IP and that she's still a statist (government IS force and you ARE at the barrel of their guns). But there are good things to be take away from Rand. That said, I don't believe in following anyone except for yourself. Everything including your happiness comes from within one's self, not from externals like things or other people. In the end I could care less what anyone thinks; it's their choice to do so.
Thanks for the links. I've heard some of Myron Fagan. Good stuff. Tradegy and Hope has a good "brain database" (link at top of their website) linking all this "conspiracy" history: http://www.tragedyandhope.com/
But after having done quite a bit of research into all this stuff, I've moved on. It's all very interesting but in the end it gets us/humanity nowhere.
I've been a bit more into philosophy and Stefan Molyneux instead. It won't happen in our lifetimes but perhaps one day people will understand the non-aggression principle.
Wow, complete lack of understanding and no simple research only sorting to name-calling. Your perspective of where I stand is very much the opposite. Does one always need to fully declare one's self? Maybe so if the other cannot read in between the lines apparently. If you only start looking of many posts you would see. Instead you're being lazy and wanted me to spoon feed your answers. Do your own homework. Otherwise it's people like you who will end up indoctrinated by the next "spoon-feeder" of information. Blast away and enjoy yourself.
Germany and the Jews http://www.scribd.com/doc/8634450/Germany-and-the-Jews-by-Benjamin-H-Fre...
Nazism is socialism based on a slightly different morality.
You missed the olive branch in the claw.
Micromanagement is accomplished through TEEVEE. And the troupe pays good money to be managed...
Bang on CD...the herding.
I see you've noticed a few things once you left the Animal Farm and set up the real thing.
They noticed the same thing ;-)
There never was a risk of default.
It was a lie concocted by Obama and instead of actual logical thought, it was breathlessly reported by all of the brain dead. On income of $225 billion a month we can surely pay $20 billion in interest.
Indeed Rand! We hear of mistakes and failures. Ha! That is all Bullshit. Ever since the 2008 collapse, the effective wealth transfer from bottom towards the top has taken off like a rocket to the moon. The rich are feeding on free central bank money, while main street economies and their people continue the 2008 collapse.
Look at the economy. Record corporate profits, record stock market and record income disparity. How is this a failure? It is NOT, in fact, 2008 was their greatest success in world history. The flood gates of wealth transfer were opened, and the elites have turned loose their spies, armies and cops all across the globe to enforce this wealth transfer.
There was not failed policy! It was successful policy. Follow the money, look who wins and who loses. Be clear about this, "The austerity for average people has only just begun"! It is going to be a face ripping wealth grab, leaving the middle class stripped naked and standing in the streets. That is what the spies, cops and armies are for, to crush any backlash.
Now we are on the same page. Pax Americana and the Reagan Thatcher concoction was just that.
It has just reached tipping point, the demise of the social construct as the Oligarchy globalist scheme that emerged in 1980 picked up momentum and spread its wings to cover the whole globe.
"Oligarchs of the world unite you have everything to gain as we dismantle the nation states and nothing to lose UNLESS we all fall out amongst us."
Hmmm, do thieves ever fall out?
Lol, just read history. The harder the fall. But while the wind blows sweetly and the nation rolls deeply into debt, who cares!
The sky is the limit and we'll toast the first trillionaire when he's born!
With the NSA out of real business since nobody not even a hopped up Al-Quedian would put sensitive materials over the Internet, the world banksters may have a bit of difficulty in taking down the western world. They will try because I realized from my college classes that even up through the age of enlightenment they were still interbreeding with their cousins. Now those deletarious genes are made manifest in the lives of what we call elite today.
They should be pretty easy to stop.
Did someone say the intentional deindustrialisation of the developed world? No? Must be hearing voices..
It's okay. We're training Gen Y and subsequent generations to provide "services."
Services, yeah...
"particularly, on its continued willingness to put critical international commitments ahead of domestic disputes."
Continued? What is that supposed to mean? I would like to see a documented example of America even once to any degree placing international commitments ahead of domestic ones, on any global issue.
We should have stayed out of every war from 1914 to date.
http://imgur.com/r/WTF/jo3xiZN
But it's all good: the creative spirit of our now sinking republic has been replaced by Ozero's cabal of Funding Fathers.
Everything is fine
http://research.stlouisfed.org/fred2/graph/?id=BOGMBASE,
According to Deutsche Bank:
https://app.box.com/s/otdvclw8ijxzflhkhem6
October 8, 2013
Bretton Woods III and the Global Savings Glut
Summary
History suggests that periods of global economic expansion are characterized by symbiotic imbalances rather than balanced arrangements that satisfy theoretical ideals. Therefore, it is important to understand the factors that drive the imbalances in each period as well as the resulting distortions. In our view, demographics will have a significant impact on the future trajectory of the world economy. In this report we specifically focus on the implications on savings and current accounts.
Population trends imply that we are entering a phase where rapid aging will cause many countries to generate persistent current account surpluses. This raises the question – who will generate the world’s deficits?
World demographics is not neatly spaced out such that some countries generate surplus savings exactly when others need to fund deficits. Moreover, there are many factors that may prevent surplus countries from funding deficit countries. Thus, we have a situation where countries like India, Brazil and Indonesia may attempt to tame their deficits before old countries like Japan and Germany enter their dissaving phase. The resulting savings glut could be further exacerbated by a likely increase in China’s current account surplus.
Thus, the emerging international economic system, dubbed by us as Bretton Woods III, will yet again depend on the United States to act as the demand source of last resort. Meanwhile, demographics will hold down the real cost of international capital whether or not the US decides to absorb part of it. In turn, the ability of world’s financial system to allocate excess savings will be tested again. Young emerging markets with the ability to sensibly deploy cheap capital could benefit disproportionately from this environment.
I am not my brother's keeper, and if my brothers think they can rob me and insult me and make me pick up the tab, my brothers are going to bitch and whine like this, and still get nothing from me.
How does the US postpone default against real investors essentially forever? It is quite simple, really - the Fed purchases Treasury debt then defaults on this security not held by an investor. Voila, creo dollarum infinitas...ALL HAIL MADAME YELLEN.
Republicans should pass a $95 tax credit if you have an Obamacare IRS penalty!
"Managing them effectively requires designing a system of global governance in which one country’s internal politics cannot jeopardize all countries’ prospects."
And so it appears that the global financial elite are now telling the U.S. government to shape up, stop fighting, and do exactly as they are told or the new system of global governance will proceed without them... lol. Michael Spence, who do you think is going to create this "new system of global governance?" and whose interests do you think it is going to serve? Why should the American people subjugate their legitimate concerns with their irresponsible government to your desire for a "new system of global governance." How about local people decide how they wish to be governed for themselves rather than having your taskmasters design some global system for them?
< America is indeed reckless.
< America is the most reck (ed) place on earth and will only become more so.
well.
Aren't we feeling a little neglected?
America The Feckless
(Feckless defn: Lacking in character, weak-minded....)