Losing the Economic Battle | The Weekly Standard

As the USA doubles down on socialism and the sense of entitlement that others owe a living to the average populace continues unabated, not only can one can look at what is going on now as an indicator of what to expect but also anticipate that it will be much worse in the future. At the root of the problem, people believe in the opiate of government intervention but will end up being completely disappointed since not only are these very governments wholly unable to solve these kinds of problems but these very same governments were instrumental in creating the economic mess that we find ourselves in. This is the classic situation where we need to consider the saying, 'when one finds oneself in a hole, stop digging.' Fully expect that continuing or doubling down on these same self destructive policies that created the mess that we have no hope of ever getting out without a cathartic cleansing that will necessarily completely change the nation. Things will only get much worse.

As a result of socialism, governments have run-up huge debts and these economies can no longer support these high levels levels of debt. As we see happening in Europe, currently manifested in Greece that will spread to other countries over the next several months, out of control social spending and government borrowing to support this riotous spending will destroy the European socialist model. Critical government European market functions such as healthcare and retirement income will not be delivered and since government crowded legislated out other delivery mechanisms eliminating other competing market providers that could take up the slack, Europeans will have to learn to live without.

The solution to the 2008 financial crisis crafted by self-identified brilliant politicians by shifting private debt where individuals and corporations were naturally deleveraging to governments by embarking on a spending and borrowing spree were in a desperate but hopeless crusade of keeping the economy rolling along. All that this has achieved is a more fragile state of affairs and one that will be even more difficult to right as time goes on since ultimately it will have to be the private competitive economy that has to perform to keep living standard up for common people....

Some analysts, including Criton Zoakos, argue that the global economy has reached a “point of no return.” Debt suffocates growth, which destroys equity values (particularly financial stocks), which diminishes lending, investment, and consumption. Falling tax receipts lead to even more debt. Optimists argue not to worry. The world since January 2008, they say, has been undergoing an important period of public and private deleveraging. Growth will resume once deleveraging is completed.

If only life were that simple! Global indebtedness, according to Zoakos, has actually increased by 17 percent since the beginning of 2008. Nations have enacted generous bailout and stimulus programs while growth has averaged an anemic 1.2 percent.

After Europe collapses, it will be the US that has to finally deal with profligate and stupid central government government spending and a huge debt that will have no chance of being serviced without some kind of debt restructuring. Get ready for an environment that could cause massive economic dislocations and global starvation.

Losing the Economic Battle | The Weekly Standard