Jeff Wigand wrote:
Sagarin,
I'm genuinely interested in this because having read my fair share of threads here, I respect your posts as having thought behind them, even though I almost always disagree with their premises.
My question for you is this: what country or countries do you see as a model for the US to work towards, with respect to how the government collects and spends the money of its citizens?
I can tell you what we shouldn't work towards... Japan (we could be on our way if we keep up the QE-perpetuity without enacting real reform), most of Europe's failed model (even some Swedish towns are incentivizing their unemployed youth to find work in Norway), or anything resembling the former Soviet State and its counterparts. I like Singapore, Malaysia, some of the Baltic nations, and some of the emerging Latin countries, etc.
But, frankly, I think we should work toward what we used to be, the country our framers intended. Unfortunately, only austerity will pull us out of this hole, along with a wholesale reform of the tax code such that it's not overly regressive or progressive, whereby, the government squeezes out the private sector more and more. Ironically, Durden featured a timely guest piece on austerity this morning, that it's not a "quick" fix, but it is a fix.
http://www.zerohedge.com/news/2012-11-30/guest-post-myth-austerityFrom Dr. Lacy Van Hunt, "From both economic theory and historical experience the answer is clear; austerity is the solution to too much debt. McKinsey Global Institute examined 32 cases where extreme leverage caused financial crises since the 1930s. In 24, or 75% of these cases austerity was required, which McKinsey defines as a multi-year and sustained increase in the saving rate. Public and/or private borrowers took on too much debt because they lived beyond their means, or they consumed more than they earned. Thus, to reverse the problem spending had to be held below income, increasing the saving rate."
http://advisorperspectives.com/advperarts.php?id=A&page=hois_11112.phpNow, it is true that both Finland and Sweden survived delevraging episodes most closely resembling ours in the 90s, and Sweden did recapitalize its banks WHILE RESTRUCTURING DEBT, something we should've instituted before the big bailout, but the key to the Nordic success story, besides vast amounts of natural resource wealth, is that the public sector delevered and SHARPLY. But, again, Sweden is struggling in certain areas, and that's not a model I feel we should emulate.
We need regulation, but it needs to be smart, not overreaching. We have many valuable natural resources that we can tap and we can pursue thorium nuclear energy, creating millions of jobs almost immediately. Unfortunately, we have spent so much of our political capital and capital capital frivolously. We never properly restructured our debt with TARP, and feckless fiscal and monetary policy will merely prolong the deleveraging episode, which I think has a minimum of five years to play itself out, IF we get everything right (we won't). The Unaffordable Care Act just may end up becoming the worst boondoggle and the best job killer yet.