One of the most encouraging signs I see right now is a worldwide push back from real working people against the assumption of more debt by tax payers. After 30 years of ballooning debt to toxic portions, individuals are finally waking up and revolting. Rallies all over the UK, Europe and the US are shouting out the mantra “debt is death.” No truer words were ever spoken and it is a great relief to hear people finally grasp this fundamental concept. Debt sucks the life blood out of families, businesses and economies as debt service payments funnel more and more resources away from current and future investment, consumption and savings.
At the same time, public confidence in politicians and central bankers has fallen to a fresh low. For very good reasons. The political and financial leaders have made horrendous decisions over the past 30 years to boost their own power and profits at the expense of prudent limits, long-standing regulation, and wisdom. We have earned our present strife the hard way: through years of foolish, self-destructive actions. See: Americans see Debt Threat.
The lenders and the borrowers are equally at fault here. It took willing fools on both sides to weave this insolvent web around the world. Now we will all pay for the clean up which will take years of diligent effort. This means fewer entitlements, less government services, and higher taxes which must be directed not to spending but to debt reduction.
The debt ceiling stand off in the US today is an embarrassment. Both sides must concede trillions in spending cuts and this includes restructuring social security and Medicare as well as cutting the ridiculous scope of the current war budget. But taxes also have to increase. The Bush tax cuts must be finally allowed to expire. They were brought in as a temporary measure so to insist that they remain permanent now is a fraud of false pretences. If both sides do the right thing, the budget will move trillions of dollars toward the black. This is the size of the remedy needed. Self-serving warnings of doom from banksters who were the primary architects of this mess, must be over-ruled. They do not want to admit they were fools and frauds, they want to keep the game going to retain their undeserved status and wealth.
Valuable leaders today must understand that the ways of unfettered spending and falling tax rates can be no more. History will judge us all by whether we led on changes needed or resisted sanity ‘til the end. The math back to a sustainable economy has no politics. The numbers are self-evident.
This Bloomberg clip with David Stockman is worthwhile:
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