Brutal Austerity Leads To… ?
We’ve been saying for months now to wait for Europe to continue it’s unraveling, and Ireland has finally decided to re-commence the decline in the European economy. The European Union is completely unsustainable and it is only a matter of time before everything economically changes on that continent including the currency.
While Ireland has the headlines for now, there are strikes going on in Portugal over austerity measures and of course Spain is still in the batter’s box waiting to step up to the plate and finish off Europe once and for all.
So, we learned the measures that Ireland is taking in order to accept the large bailout. It includes massive cuts in spending and government jobs in conjunction with massive tax hikes. In other words, pain. In other other words, lower standards of living across the board.
Welcome to the 21st century.
So, the question now becomes – and frankly this is a larger, global question – is how to the people of Ireland deal with these measures? Do they riot? Do they accept them as harsh, but necessary measures? I’d bet on the former, not the latter. After all, in today’s world, bailout is the preferred B-word, not buckle down.
So, the larger question here that refuses to go away despite people rolling their eyes at you and/or writing you off as “extreme” is where is all of this leading?
Anyone with a clue knew when Greece was bailed out that not all was fixed. Just like anyone with a clue knows that the United States faces massive, structural issues that are being completely unaddressed.
So, again where is this leading? Will the United States be forced to implement austerity measures at some point? Probably, but don’t expect the public to embrace it nor the politician to lead the charge. It’ll be forced by the market or the world. You saw how the public and the politicians on both sides reacted to the recommendations of Obama’s debt commission – which was essentially a recommendation of austerity measures like Ireland is putting in place.
We have a global economy dependent and built upon continuous expansion.
A union chief in Ireland said the austerity measures would put them back in the stone age. They need a pro-growth agenda, not cuts! Question: what if there is no growth to be had?
Real growth does not equate to debt expansion, which is essentially is the growth we’ve had in recent years. Expand or die. You saw what happened when the expansion stopped in 2008. Rumors of complete meltdown! Money markets dying! etc etc. We’ve been able to create phony expansion since then with fraudulent growth via the Fed.
The seeds of unrest are spreading across much of the developed world. They are there to be seen if you choose to open your eyes. Greece, France, Portugal, now Ireland.
The United States can keep the game going longer than any other nation because of the reserve currency status and the military. But the market forces cannot be beaten, they can only be delayed. What happens when trillions of dollars being printed no longer continues the delay?
This my friends is the golden question, and potentially the most important question of our lives. What happens when the ponzi scheme economy is unable to be extended any longer? We all know that ponzi schemes ALWAYS end. Ours will too.
What happens when it ends? How will Americans react?
Do they riot? Do they accept them as harsh, but necessary measures? I’d bet on the former, not the latter. After all, in today’s world, bailout is the preferred B-word, not buckle down.