Paul Krugman, a professor at Princeton and a Nobel Laureate, is specialised on international trade and finance. His current work is focused on economic and currency crises, and he is one of the preeminent economists of our time. I am inclined to trust his verdict.
He calls the GOP budget plan voodoo economics.
“A plan that proposes to cut spending to Calving Coolidge levels, without explaining how it will do that; that includes $2.9 trillion in tax cuts, but asserts that it will make that up by broadening the base — yet says literally nothing about what that means; and has as its centerpiece a Medicare plan that will collapse as soon as seniors start getting their grossly inadequate vouchers.”
I am not an economist, but I’d say he has a point.
The European Union has just granted an € 90 bn bailout to Portugal. A tiny country at the edge of the continent, a tiny strip at the Atlantic coast with a level of debt about 230% of it’s GDP and the lowest economic growth in Europe. At least, they do not owe the crisis to the reckless gambling habits of their banking system, but they had since seen their credit ratings downgraded to dangerous levels. At the same time as austerity plans are imposed on European countries, the European Central Bank raises the interest rate.
And how is this supposed to stimulate the economy ?
There is an interesting survey in the “Economist” showing a marked fall in faith of capitalism and free market economy. The numbers fell sharply in the US and of the 25 countries polled, support for the free market is now greatest in Germany, just ahead of Brazil and communist China, both of which have seen strong growth in recent years.
The problem it appears may not be so much technical, but political. What we are facing is the rapid disappearance of capitalism – a thought so unbelievable, that nobody dares to even say it. But capitalism – an economic system in which means of production are operated for profit – is dead as a dodo. Unbelievably so…
The helplessness of politics and the media are obvious. And the cynicism is hair-raising, as austerity programs are cutting funds for education,healthcare and welfare in favor of bailing out banks with tax money. Anyone with a little bit of economic sense can see where this is going and that what is needed nor is restructuring, not politics and defense. It needs bold thinking and and the abandonment of profit as the sole intent of labor. It needs a redefinition of value, society and distribution. There is enough for everybody and by redefining the value of work, by foregoing competition, pursuit of profit, irresponsibility, we will reduce greed, egotism, recklessness and most of all – division. This does not mean communism, as this system too has failed. It means ” a good life for everybody” – democracy, sustainability and human dignity.
It needs – a New Earth and as far as I am concerned, I just allow it to happen Now.