The New York Times is as iconic a figure in both New York and the United States as a whole and the growing possibility of the decline of the paper presages a demise of the city and country as a whole. On June the 9th the New York Times ran an editorial whose contents you will see below in black quotes. In reading another simultaneous editorial about Isreal I am becoming increasingly dismayed that at the heart of modern civilization (New York) such literary and intellectual dribble seems to flow without shame. No wonder some people worry about the paper and the very fabric that the United States is made from. I include two comments from David Brooks, published in the Times the next day, which shows that the contarium side I take below is shared by many.
I am going to wrap my comments around this editorial but will comment in a different essay on what the Times and others are saying about the ever increasing tensions around Isreal. That of course is one of the hottest subjects on the planet and it should be because instead of resolving the near impossible issues there we are risking a third world war if Isreal ever attacks Iran. At a minimum there should be open discussions but in reality all we have are threats as the recent situation with Helen Thomas illustrates.
“The whip-deficits-now fever is running hot on both sides of the Atlantic. In Europe, politicians are understandably spooked by investors dumping government bonds in the wake of the Greek meltdown. But the sudden fierce enthusiasm for fiscal austerity, especially among stronger economies, is likely to backfire, condemning Europe to years of stagnation or worse.” The US take on this is to borrow a couple of more trillion and then have to face what Europe is trying to face now. Of course the deeper you dig the debt hole the more difficult it is to climb out of it.
Sixteen months ago, Congress passed a stimulus package that will end up costing each average taxpayer $7,798. Economists were divided then about whether this spending was worth it, and they are just as divided now. - David Brooks Times Contributor
“The United States is running the same very high risk. Democrats have soured on job creation and economic stimulus in favor of anti-deficit rhetoric, which Republicans have long seen as the easy road to discontented voters in a confusing election year.” The Times is advocating loose and free money (of course much of that goes to Wall Street). Even Democrats though are getting tired of borrowing trillions and are being warned now is not the time to lose at playing chicken. Come on a couple trillion more will not hurt!
Voters, business leaders and political leaders do not seem to think that the stimulus was such a smashing success that we should do it again, even with today’s high unemployment. - David Brooks
“At a hearing on Wednesday, the Federal Reserve chairman, Ben Bernanke, said job creation and financial-stabilization programs were essential to stop recession from becoming depression.” Yes it is official, we are threatened by a great depression and you can read about it right here in the Times.
“But he also called for “a strong commitment to fiscal responsibility in the longer run.” The emphasis in that statement should be on that “longer run,” but we fear many politicians weren’t listening for nuance.” What they were listening to is facing fiscal responsibility with a few trillion more on its balance sheets. The Times is literally setting the western world up for even more agony in the future with its suggestions and insinuations. It is intellectually dishonest to hide the FACT that fiscal responsibility becomes impossible as debt explodes upward.
“The economic crisis isn’t over. No kidding! Nearly 1 in 10 workers is still unemployed in the United States and in the European Union. Germany, Europe’s most robust economy, suffers 7 percent unemployment. In Spain, it is nearly 20 percent. Still, the German government plans to cut its budget deficit from 5 percent to 3 percent of gross domestic product by 2013. The Spanish government promised to cut to 6 percent from 11.2 percent. The new British government promised to take an ax to spending when it proposes its budget on June 22.” The Times does not like to truth speak much anymore for it’s at least 2 in ten unemployed and that’s quite a few million people that the Times are spacing out. Like the government it finds it convenient to play with numbers.
“The Obama administration has warned that the new austerity drive could undercut economic recovery and has pressed the case that stronger countries, such as Germany, should not slam on the brakes.” The fact is that there is no longer an economic recovery so Obama is just whistling in the wind, which he likes to do. Can you imagine him on the decks of the Titanic singing out things are getting better every day? Perhaps he sees himself as a Beatle singing about things getting better, better…better?
“In a letter to G-20 colleagues, Treasury Secretary Timothy Geithner warned that budget cutting won’t work “unless we are able to strengthen confidence in the global recovery“.” Geithner is correct, it is not going to work and neither is anything else. Nothing is going to bring back credit dependant growth patterns. That rise to riches scheme has played itself out but the richest people and organizations don’t want the cocktail party to end, at least not quite yet.
The hidden agenda is of course kick the can down the road just a bit longer since we already have so much unpayable debt why not string the world a little longer. Anyone with a hand full of credit who knows the system or game of musical financial chairs is about to end will still want to use that credit knowing where it’s all headed. This is of course immoral and perhaps even illegal, borrowing money you know you cannot pay back. Of course one can pretend until the end that the end is not coming letting themselves off the moral and legal hook.
“Weak European governments cannot ignore investors dumping their bonds, and they will eventually public have to curb their gaping budget deficits. But for everybody to slash spending when growth is faltering and unemployment remains stubbornly high risks undercutting the goal of fiscal probity by slowing economic growth and reducing tax revenues.” Revenues have been falling for over two years and these gaping budget deficits are insane and obscene in the strongest economies of the United States, Japan and England. This eventuality the Times editors are speaking of will be more crushing the higher the debt tide rises. The reality is that it is really too late, we have maxed out most countries, states, cities and towns credit cards. Those on the border line have to cut their spending or worse declare bankruptcy soon. Others still have their AAA credit ratings and can still borrow but for how much longer?
“The global recovery is already faltering.” That is correct and that is the reality. “China’s economy is losing momentum. The United States’ is slowing. If budget cutting depressed economic growth, the reaction from investors would be no less brutal than their current attack on European bonds.” Yes sadly it’s going to be brutal either way.
“The problem calls for a varied response. Some countries, such as Spain or Portugal, may have to drastically cut their budgets if they don’t want to lose their access to capital markets. But countries such as Germany, Britain and the United States have space to spend.” Borrow and spend would have been a more honest communication and for Britain they themselves think they have borrowed and lent enough.
“Interest rates on German and U.S. bonds remain low. Rates on British debt also are very low, reflecting better growth prospects than those of the countries that use the euro. For them, the best policy should be to take advantage of the cheap money to spend more, not less.” There are no growth prospects for that paradigm is dead and obviously European governments have already seen the handwriting on the wall. The name of their game is how to intelligently manage a contraction instead of facing a terrifying collapse.
“Deficits will have to be reduced once the recovery gains more traction and unemployment recedes. Right now, for the most robust economies — the United States, Germany, Britain, Japan — slashing budgets is the wrong thing to do.” Which means they are saying take out a few new credit cards, even if you have to fabricate them yourselves, and borrow much more and continue dancing the night away. The whole point revolves around hopes of recovery when there is no hope. There is absolutely no hope except the false recovery we have had that has been dependent on more debt creation.
It’s suicidal to take on more debt with the hopes that it will make things better. That is not the nature of debt as history sustains over and over. In the end increasing the mountain of debt will only increase the suffering and steepen the contraction that is coming anyway. Income and world wealth are in contraction and nothing will reverse that slide until the world reorganizes itself.
The world is splitting apart and this essay and editorial is showing in just one way how this is happening. Parts of the world now have to slam on the breaks and the other wants to accelerate their debts and decent into financial and economic hell. It looks like either way one cuts the pie we will have the same end result and that is going to be a drastically different world coming to towns, cities, states and countries and most of the people in them all around the world.
The Daily Bell printed: If the economic system collapses the four horsemen will ride and the sky will bleed expressing the thoughts that some hold that, “If the current economic system collapses millions and perhaps billions will die.” But the people at the Daily Bell are more optimistic about the backbone of humanity feeling most will pull through the coming ordeal is good form. But they are not calculating in complicating factors like dramatic climate change and diminishing food availability. There is only so much we can see of the future but some of its shape can be seen by open, honest and discerning minds and hearts. One can almost feel it coming and that is not a comfortable feeling at all especially if one has kids to take care of.