Here’s another news appearance from my new youtube channel. I chat about the importance (or lack thereof) of a possible ratings downgrade for the United States government.
You’ll see that I’m not overly impressed by Moody’s and the rest of the rating agencies.
[…] not a big fan of Moody’s, Fitch, and Standard & Poor’s. As I explained in this 2011 interview, these credit rating firms don’t provide much insight, at least with regards to assessing whether […]
[…] not a big fan of Moody’s, Fitch, and Standard & Poor’s. As I explained in this 2011 interview, these credit rating firms don’t provide much insight, at least with regards to assessing whether […]
[…] not a big fan of Moody’s, Fitch, and Standard & Poor’s. As I explained in this 2011 interview, these credit rating firms don’t provide much insight, at least with regards to assessing […]
We may be “on an Express Train to becoming Portugal and Greece”. However, to complete the picture, there are a few places we may stop and stabilize along the way, like… France! For one, that is the economic equilibrium point where Paul Krugman economics – whereby a magical perpetual motion machine of prosperity can be built on a fundamentally loose correlation between personal effort and personal reward – hope that we will eventually stabilize to, and dream that there we will stay. But is that really a point of equilibrium?
France’s per capita GDP has grown from about $19,500 to about $23,500 (year 2000 dollars) overall in the last 20 years. That is a tad less than 1% annual growth. On this trendline, France’s standard of living compared to the world average (growing at 4.5% annually) is eroding by 3.5% every year. Is this the enviable destiny of decline aspired by Paul Krugman and his followers?
So the statement that “we are on an express train to become Portugal and Greece” may be a bit of an exaggeration. However, we are on a seemingly irreversible path to becoming a dying European Welfare State economic dinosaur.
There is currently (and by far) no economic entity in the world capable of bailing out a failing United States. Even the much ballyhooed 3 trillion Chinese surplus (even if the Chinese were to somehow get out of their minds and magically donate it towards”saving” the US) would only cover about one quarter of US outstanding debt. So, indeed, with no economic entity big enough to stop the American fiscal disaster train, it is possible that the American train of “hope and change” could just blow by the French economic stagnation stage and go directly to Greece on its journey to decline. So what will it be? France? Italy? Portugal? Greece? So many choices! The future looks bright!
As I’ve said a few times to the revered American Middle Class: “If you think that you got it bad now, wait until you are more equal”. Your attempts to equality amongst US citizens will have one predictable outcome: US economic growth will fail to keep up with the world average and the 3 billion people of the developing world will catch up and become equal with you. You will then long for the once prosperous past when you were less equal, but still in the top 5% in the worldwide prosperity scale.
[…] not a big fan of Moody’s, Fitch, and Standard & Poor’s. As I explained in this 2011 interview, these credit rating firms don’t provide much insight, at least with regards to assessing whether […]
[…] not a big fan of Moody’s, Fitch, and Standard & Poor’s. As I explained in this 2011 interview, these credit rating firms don’t provide much insight, at least with regards to assessing whether […]
[…] not a big fan of Moody’s, Fitch, and Standard & Poor’s. As I explained in this 2011 interview, these credit rating firms don’t provide much insight, at least with regards to assessing […]
[…] not a big fan of the rating agencies. I’ve warned in TV interviews that they generally wait too long before downgrading profligate […]
[…] not a big fan of the rating agencies. I’ve warned in TV interviews that they generally wait too long before downgrading profligate […]
[…] not a big fan of the rating agencies. I’ve warned in TV interviews that they generally wait too long before downgrading profligate […]
We may be “on an Express Train to becoming Portugal and Greece”. However, to complete the picture, there are a few places we may stop and stabilize along the way, like… France! For one, that is the economic equilibrium point where Paul Krugman economics – whereby a magical perpetual motion machine of prosperity can be built on a fundamentally loose correlation between personal effort and personal reward – hope that we will eventually stabilize to, and dream that there we will stay. But is that really a point of equilibrium?
France’s per capita GDP has grown from about $19,500 to about $23,500 (year 2000 dollars) overall in the last 20 years. That is a tad less than 1% annual growth. On this trendline, France’s standard of living compared to the world average (growing at 4.5% annually) is eroding by 3.5% every year. Is this the enviable destiny of decline aspired by Paul Krugman and his followers?
So the statement that “we are on an express train to become Portugal and Greece” may be a bit of an exaggeration. However, we are on a seemingly irreversible path to becoming a dying European Welfare State economic dinosaur.
There is currently (and by far) no economic entity in the world capable of bailing out a failing United States. Even the much ballyhooed 3 trillion Chinese surplus (even if the Chinese were to somehow get out of their minds and magically donate it towards”saving” the US) would only cover about one quarter of US outstanding debt. So, indeed, with no economic entity big enough to stop the American fiscal disaster train, it is possible that the American train of “hope and change” could just blow by the French economic stagnation stage and go directly to Greece on its journey to decline. So what will it be? France? Italy? Portugal? Greece? So many choices! The future looks bright!
As I’ve said a few times to the revered American Middle Class: “If you think that you got it bad now, wait until you are more equal”. Your attempts to equality amongst US citizens will have one predictable outcome: US economic growth will fail to keep up with the world average and the 3 billion people of the developing world will catch up and become equal with you. You will then long for the once prosperous past when you were less equal, but still in the top 5% in the worldwide prosperity scale.