Short term stimulus and Greek tragedies

I hear over and over from talking heads that calls for ending economy-killing regulations and tax reform are long term solutions, but what we need is short term government stimulus to create jobs and pump up demand. Democrats mostly say lack of demand is the problem. Even moderate Republicans are on the demand side.

We're in a situation, though, in which long term and short term are bound together. Businesses are not investing in America because of the long term outlook. Businesses won't expand and hire if they think the long term outlook is uncertain or bleak. When the EU is on the brink of implosion, and when China appears to be in a bubble of sustainable growth, there are at least two ways businesses in America can analyze the global and domestic markets. If American businesses are confident that our government is not going to continue the regulation blitz, that Obamacare is not going to hit them with unintended consequences and that taxes will not necessarily go higher because of our mounting debt, they will  expand and hire to take advantage of weaknesses in other nations and thus attract investment. But, if businesses are worried that exports to Europe will shrink, and that China might withdraw in nationalist protection mode if they experience economic problems, and if businesses expect more expenses piled on by government interventions, then they will seek safe havens for their capital.

A positive long term outlook is critical to business confidence, so it would behoove our politicians to develope plans to instill confidence in American enterprise. Obama and company are doing the opposite by framing "unfettered" capitalism as the enemy and government interventions as the solutions. This Democrat populist ploy is only adding to the worries of American businesses. Yes, there are large corporations in America who will always profit as long as they enjoy government protection and favortism, but our future lies in the businesses which aren't protected, which need assurance that their costs won't rise significantly in the long term, say the next 5 to 10 years. Instead of trashing American enterprise, our country should be championing enterprise, expansion and job growth led by successful producers.

We have an opportunity to make America a magnet for business investment, but we have to create a very business-friendly environment, and right now it's not too friendly. Rather than follow Greece to ruin, we should learn from what has crought Greece to ruin, then make sure that the business of America is business -- free, open trade, innovation, creativity and optimism -- we can do much better, but not if our government is blocking growth.

EU dissarray

http://www.reuters.com/article/2011/11/01/us-greece-referendum-idUSTRE79U5PQ20111101?feedType=RSS&feedName=topNews&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+reuters%2FtopNews+%28News+%2F+US+%2F+Top+News%29&utm_content=Google+Feedfetcher

The European Union is coming unravelled. Never a good idea, now that we're in a global recession, the flaws of the union are even more apparent. Germany will tire quickly from dealing with practically failed States such as Greece. The EU still has to deal with the other weak and teetering nations, and I don't know where the money will come from -- out of thin air is not an option. Greece is unlikely to get better anytime soon, because Greece's problem is not lack of money, but lack of ability to create wealth, and this is not just Greece's problem -- it's widespread. These countries apparently don't believe that certain political/economic systems have consequences, and that certain economic laws can't be violated. You can't pay out more money than you take in forever -- it seems like grownups would know this.

The anti-capitalist attitudes in Europe and southern Europe's disintegration of productive, innovative activity has finally caught up with them and the consequences will be traumatic.

Sustained economic growth

http://www.cnn.com/2011/10/27/business/euro-debt-crisis-plan/index.html?eref=mrss_igoogle_world

Economic growth is the answer to Europe's problems, as it is for America's problems, but I don't see Greece, Italy or Spain sustaining economic growth and creating new wealth at the level needed unless they change direction from statism to free market economies. But in order for free markets to work, they must be embraced, believed in, and this just doesn't to be in the cards. I think stock traders were a little premature in their optimism.

Germany's EU problem

http://www.bbc.co.uk/news/world-europe-15449149

Germany is in danger of getting so deep in the EU financial crisis she can't get out without tremendous economic damage. I don't think private investors will jump at the opportunity to become entangled in this mess. There's little reason to believe that Greece, Spain or Italy will fundamentally change anytime soon, not with their citizens entrenched in an entitlement mindset. Those asked to sacrifice will point to goverrnment waste and corruption, and the governments won't have good answers.

Plus, with Greece, Spain and Italy drained dry, Germany won't have captive customers. The new global economy is tough, and only the leanest, most innovative, most flexible, most productive, most free and most efficient will thrive. America, too, has a long way to go.

Geithner spreads American financial insanity

http://www.washingtonpost.com/business/economy/geithner-us-treasury-secretary-urges-major-shift-in-european-financial-system/2011/09/23/gIQAA5DirK_story_1.html

Timothy Geithner wants Europe to follow America in printing money in order to save the too-big to-fails of the world -- Greece, European banks, Italy, Spain, and so on. Forget about cutting spending, just print more money. Geithner is trying his best to undercut rational efforts to make Europe financially sound -- it's not enough for him to be on the team that has irrationally inflated our money supply, now he wants to be on an international team to flirt with global inflation that places a hidden tax on everyone.