The U.S. and Germany sparred about how to tackle Europe’s sovereign debt crisis as a meeting of officials from the world’s biggest economies struggled to break an impasse over outside help for the region.
U.S. Treasury Secretary Timothy F. Geithner used a speech in Mexico City yesterday to urge Europe to step up its actions and render its crisis-fighting commitments “credible.” German Finance Wolfgang Schaeuble rebuffed those calls two hours later, saying a deal struck on Feb. 21 for a second bailout and debt write-down for Greece worth 130 billion euros ($175 billion) demonstrates that Europe is doing enough.
“I dare to say that Europe has done its homework,”Schaeuble said in a speech in the Mexican capital. Tightening bond spreads in the euro region “show that we’re on the right course” while budget cuts and more flexible labor markets and wages are necessary to spur economic growth and bolster the euro in the longer term, he added. “That’s the only way we’ll be able to restore confidence,” he said.
Oh, let’s put this all in simple-man’s English, shall we?
Germany is laying out the correct course — albeit without saying it loudly — that the nations of Europe must only spend what they take in at both government and personal levels. That is, the mathematical truth that one can only spend what one produces has been recognized.
Geithner, bankster stooge that he is, is on the other side. He believes that one should simply pretend that various loans and activities that are not “money good” actually are money good through various machinations, schemes and outright scams.
The latter is of course just can-kicking, but doing so comes at an ever-higher price. Geithner doesn’t care about that so long as it doesn’t nail our banks and government, and he believes (correctly thus far) that he can shove this off on other people.
Fresh money eh? Money comes from surplus. Where are you going to find the economic surplus? Or are you simply going to try to conjure it out of thin air, thereby debasing currencies and driving up commodity prices even more?
The latter won’t work you know. It hasn’t thus far and won’t in the future, because it can’t. Everything is a balance sheet, and when you do something like that you’re basically taxing the money out of the people by stealth.
Let me repeat that: The impact of such a move is exactly identical in the “broad view” to instituting a tax on the people in the amount of rescue funds you “create.”
The point of such an exercise is simply to increase taxes while lying about it, claiming you’re not. The people are unfortunately not all that smart and often don’t figure it out, but they damn well should and the result (if they do) would be to depose the government officials who do so.
But the alternative is equally bad, because telling the truth means you have to tell millions of citizens that you lied to them about what they can have in terms of social spending and such. This can also lead to you being deposed.
Well, pick one folks, because while both are politically unpalatable the “stealth” approach can easily wind up blowing up the government, since it will continue to make un-fundable political promises right up until the market barfs on the continual new debt issuances necessary.
The fact of the matter is that despite all the arm-waving there is no solution to the European problems, nor ours here in America, until the deficit spending stops.