Do you agree? http://finance.yahoo.com/tech-ticke...tipping-point"-glenn-hubbard-says-535457.html U.S. Economy "Close to a Destructive Tipping Point," Glenn Hubbard Says Posted Sep 28, 2010 07:30am EDT "America is very close to a destructive tipping point," co-authors Glenn Hubbard and Peter Navarro warn in their new book Seeds of Destruction. "We must change how we conduct our politics and economics...or we will inevitably go the way of all once-great nations and suffer an irreversible decline." Hubbard, dean of Columbia Business School, joined Dan Gross and I to discuss the "major structural imbalances" facing America, chief among them being the government's profligate spending. Hubbard, you may recall, was chairman of the President's Council of Economic Advisers during George W. Bush's first term. As you might expect, he is a strong advocate of smaller government and lower taxes. But Hubbard and Navarro, a business professor at UC Irvine, are also harshly critical of Bush's "gross mismanagement" of the fiscal stimulus bequeathed to his administration by President Clinton. Specifically, Hubbard chastises his former boss for the creation of a new unfunded federal mandate, Medicare Part D. But if Bush was a big spender, President Obama is "taking it to a whole other level," Hubbard says, citing the familiar critiques of ObamaCare and Financial Reform and "excess government spending" in general. "We as a nation cannot resolve what have become deep and systemic structural imbalances in our economy simply by throwing more money and more and more regulations and more and more taxes at the problem," Hubbard and Navarro write.
All the spending we do has to be payed for. its such a simple concept and no one gets it. Was there really any growth in last 7 years? Probably not because we borrowed a bunch counted it as growth and then three years later all the projects failed. Now its going to be the US government.
No. Actually, there is not sign of such pending destruction. Economics is not a science. These forecasts are based on esoteric analysis. Every coin in Economics has two sides. As far as I am concerned, Europe is close to destruction and although they may have delayed it with a "verbal" 1 trillion fund for 3 years, I do not think they intend to actually give anything away and the Germans will split from the Euro down the road. ChiAmerica will do fine if they agree to a reasonable exchange rate for the Yuan. Otherwise, China will go down and America will continue alone. Simple stuff, I understand the propaganda and that fear sells. But please, keep your esoteric stuff to yourselves. Economics shouldn't even be a University subject. It should join the remnants of Astrology and be practiced in 10 sq. ft. studios in New York Village area. For every reading of the Economy, you get a tarrot reading for free. Idiots...
You're right to an extent. Forecasting dates of destruction, etc., is hardly a science. Neither is the vast majority of academic economics. However, basic common-sense tenets, such as "you've got to pay the piper," "you can't spend like drunken sailor forever," "it's better to deal with reality, suffer now and gradually rebuild" have been totally ignored. This can't end well.
You see, US is printing money. US can print as much money as it wants and face the consequences. All the destruction talk is originated from the losers of this process. Every process has a good and a bad side. Inflation is the only (financial) mechanism known to man for transferring wealth from lenders to borrowers. China is lender of US money to US. China is losing wealth if US prints money to replenish what has left US to China. It is only natural that China will create noise that this process leads to destruction in order to stop it. But it is not anything other than transferring wealth back from China to the US. The Chinese entered in a game of trade with US knowing that they would lose if they could not stop US from printing money. Since they cannot stop US the only way is to try to make noise about the process. They should sit down and agree to a reasonable exchange rate for the Yuan. They were left for too long manipulating currency markets and squeezing money and jobs from the US. It is time to either concede or face the consequences.