WHEN DEBT CUTS INTO THE BONE:
Many countries are overdoing the austerity: Germany has no deficit, but it’s interior demand has long been very weak, as it rested on the likes of Greek and Iberian madness. Now the German economy is contracting. In Great Britain, savage cuts are proving self defeating: the deficit is still above 7%, the country is rolling again in recession, with long term GDP numbers worse than in the depression of the 1930s.
David Cameron, an extremely rich scion, Britain’s chief, thinks smart to duplicate the degeneracy that afflicts the USA, ever since Reagan imposed Voodoo economics. Thanks to Cameron, it can cost 10,000 euros to attend public university in the UK. Such cuts, should they stick, guarantee that the historical strength of the West, intellectual power, will sink in England, as surely as the Titanic.
California does not have a deficit, Paul Krugman boasted. Sure. Because of horrendous cuts, through the muscles, into the bones. Say in education: the, supposedly public, University of California charges California residents more than $12,000 in tuition, about a quarter of the median USA family income. Another sneaky deficit fighting measure is to let children enter primary school a year later. Meanwhile health costs considerably more to the public, thanks to genial Obamacare.
No more education, no more health, while Paul Krugman, self proclaimed “conscience of a liberal”, extols California as an example. The hyper rich have something to celebrate, many of the richest of the elite still pays no taxes, thanks to loopholes that the media never talks about (while the working stiff pays nearly as much tax as in France, without any of the free stuff there).
LET’S LIE ABOUT FEDERAL DEBT: WHAT COULD GO WRONG?
Paul Krugman, much of the New York Times and much of the official left, claim that there is no debt problem in the USA: the debt is only 73% of GDP (less than France or even Germany). This chorus has recently been joined by the Congress Budget Office (CBO) and the Wall Street Journal.
And yet. The debt ceiling has been broken through. The ceiling was at 16,4 TRILLION. Total debt is now crossing $16.5 trillion. The USA GDP is around 15 trillion. Thus the debt is 111% of GDP, as the IMF says, it’s not 73% as many democrats claim.
(The green line above depicts what would have happened if Reagan had balanced his budget instead of practicing the Voodoo Economics that debt did not matter.)
If one tried to point to that fact, the 111% debt, the New York Times censorship bureau was long in the habit to find such news unfit to print, and would censor them immediately. They did this to me, dozens of times. I amused myself seeing the liberally correct establishment crack down on this apparently anti-liberal notion. the real extent of the debt. Another trick was to publish unfavorable comments informing me that I “did not know what I was talking about”, and should “do [my] homework“.
The Economist, apparently recognized that there was something good in this conspiracy to underestimate the debt. So it nebulously recognized that the debt was “actually 25%” higher than 73%. That is 100% of GDP.
But, as I said, the total USA debt is above 111% of GDP, and growing by 1% every two months. Not exactly a viable proposition. Those who deny this are, on the face of it, just sycophants of the present economic-financial system. As it is, the USA cannot apply to the European Union, on financial grounds alone. Ironical.
Debt is not computed in the same way in Europe and the USA. First, one has to distinguish “gross” public debt and net public debt. Net public debt subtracts fiscal assets (cash, bonds, shares) owned by the government.
When Europeans talk about the debt their states owe, they talk about the gross debt. That makes a huge difference due to the many assets owned by European states.
The French government could argue French debt is not that bad, because it owns shares in Renault, EADS, etc. The Greek government is busy selling various assets it owns to reduce its debt (countless islands, etc.).
But this is not the mentality ruling the bean counters in the USA. There those who want to under-estimate the debt of the government of the USA, far from being rigorous as the Europeans, go to the opposite extreme. They do NOT take into account the money borrowed FROM Medicare and the Social Security “Trust” Fund. Those who want to underestimate the debt of the USA do not count government bonds owned by the Social Security Fund since it is seen as one arm of government having a claim on another arm of the government.
This sleight of hand reduces the debt/GDP of the USA from 111% down to 73%. In other words, according to this subterfuge, the government general fund does not have to reimburse the five trillion dollars it owes to Medicare and Social Security. Paul Krugman and many at the New York Times and the CBO find this conscientious and liberal.