Atlas upon seeing that the greater his effort, the heavier the world bores down on his shoulders, he simply shrugs. We have a dystopian Occident, where capitalists refuse to be exploited by increasing taxation and regulations and disappear offshore. Yes, capitalists are on strike! They are stopping the motor of the world by withdrawing their minds that drive growth and productivity. Capitalists demonstrate that a world in which the individual is not free to create is doomed, civilization cannot exist where capitalists are slaves of kleptocrats, and the destruction of the profit motive leads to the collapse of society. Atlas shrugged!
History's first sovereign default came in the 4th century BC, committed by ten Greek municipalities. There was one creditor: the temple of Delos, Apollo's mythical birthplace. Jesus Nazarene talked many times about forgiving debts, and this has influenced many Christians of our times.
Many pullpeddlers and rabblerousers are pushing for a global Debt Jubilee, in order to pull the world out of the present global depression. But governments cannot force Debt Jubilee, which is a massive haircut of all loans, including mortgage and credit card debt. The notion of a Debt Jubilee dates back to biblical Israel where debts were forgiven every fifty years or so. Debt forgiveness would help borrowers get through the pain of deleveraging sooner rather than later.
Effected by the virus of PIGS, the German economy has stalled, ready to fall into recession in 2013. There are declines in manufacturing orders, industrial output, imports, and exports. The German economy is losing momentum. Things will go downhill from here. The German economy is not faring as badly as the rest of the eurozone but it can't disconnect itself from the PIGS. http://venitism.blogspot.com
A nearly uninterrupted six-year drop in unemployment is coming to an end. Merkel has said repeatedly she will do everything to save the euro. But Germans hate supporting the PIGS. The stabilization of eurozone should not be a goal in and of itself. Merkel's rescue of PIGS is her Achilles heel. This will only get bigger as the government's ability to dole out new money comes under strain from a weakening economy.
China's economy, heavily dependent on exports, is slowing fast. The global economic outlook is extremely grim. The Chinese government responded to the global depression with a massive credit expansion that has stoked inflation and fed a property boom. It also increased controls on the economy through state-owned companies, further concentrating state power, which is politically destabilizing as growth slows down.
The best that can be hoped for in 2012 is a muddling through. Politics and contagion are the drivers of this underperforming market, not balance sheets and earnings. It is going to take a new election to get any legislation through to deal with our problems. If the political system starts functioning effectively again, it's not too late for policymakers to catch up and stop the global depression.
But elections alone may not prove the answer. To break the paralysis, political leaders need to offer a new vision, one that rebalances the cozy linkage between financiers and kleptocrats, otherwise the credibility of the political system will remain compromised. There has to be a shifting of our institutions. The banking system is at the heart of our economic system and with it extraordinary ties to the political system.
According to Arthur Laffer, the low-tax states belong to a different genus entirely. It's like comparing Hong Kong with Greece or King Kong with fleas! Occident must minimize taxes to single digits and abolish sales taxes and VAT. Starve the beast by fighting taxes. http://venitism.blogspot.com
The political crisis shot to the foreground this year as voters lost confidence in how governments responded to the global depression. Big government is the real villain for exploiting the crisis to expand its regulatory powers that intrude on free markets, and to spend money on huge bailouts and social welfare programs that have only exploded the budget deficit. The victim is the average citizen who is left paying a gigantic bill, through high unemployment, higher taxes, and lost economic opportunity.
Taxes, especially VAT, feed the underground economy. It is your patriotic duty to evade taxes, especially VAT, all the way! Taxation causes an enormous and unnecessary dead-weight loss to the economic system. The sheer cost and time burden of businesses and individuals trying to comply with the tax system, let alone the cost of myriad bureaucrats who claim to be administrating it, waste hundreds of billions of euros. This waste of resources unnecessarily reduces economic growth and job creation. A major reason this obscenity persists is that few kleptocrats think seriously about the consequences of what they have done and are doing, or just don't care. http://venitism.blogspot.com
Political dysfunction will continue well after the 2012 elections, while China completes its leadership handover by the spring of 2013. Occidental politicians have shown utter unwillingness to take tough decisions they know should be enacted to stop the global depression. With an estimated $6 trillion solvency shortfall of the eurozone banks, and $16 trillion in U.S. public debt, it will take leadership of far greater caliber to avert a disaster. Such leadership is nowhere in sight.
When an economy suffers from erectile dysfunction, via-grab does not work, but only via-cut. The via recommended is to cut taxes, not grab more taxes. There are limits to how much government can tax before it kills the host. Even worse,
when government attempts to subsidize prices, it has the net effect of inflating
them instead. The economic reality is that you cannot distort natural market
pressures without unintended consequences. Market forces would drive prices
down. Government meddling negates these pressures, adds regulatory compliance
costs and layers of bureaucracy, and in the end, drives prices up.
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