In the very early hours of Thursday I blogged that it was outrageous the shambles our politicians have created 'managing' economic affairs in Europe. Little did I suspect that the hurricane that has hit world markets would happen. It was my Michael Fish moment.
I am outraged still. We had the unedifying spectacle of the President of the European Commission writing to eurozone governments telling them in effect to 'get their fingers out'.
It has been announced that the USA is to be downgraded by Standard and Poor's, the rating agency. One sentence in the statement stands out:
"More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges."
Governments are supposed to represent us. We are being treated like the poor bloody infantry, being sent over the top to be the carnage of the economic war.
I commend the article in the Guardian.
Is that why all Europe and the U.S. are running up sovereign debt and destroying our own currencies? Is it an economic war, and the nation with the weakest currency wins?
ReplyDeleteI am furious with the reckless actions of my own government in Washington D.C. Inflation through currency devaluation is just another tax on everyone who holds that currency. It also taxes them unequally--taxing less on those who borrow money, while hammering those who do not borrow, or worse yet are foolish enough to save.
Inflation is also one of the "safest" taxes from the perspective of the government, since when prices go up on food, fuel, and sundries, the simple-minded of the populace will blame the grocery, the oil company, or manufacturers. The populace will blame ANYONE EXCEPT THE GOVERNMENT WHO IS REALLY RESPONSIBLE.
It is a destructive game.
Kris
There is the prospect of competitive devaluation of currencies, but will it work? Doubtful. Countries should leave their currency value to the market. Eurozone problems would not have arisen if countries like Greece, Italy,Ireland etc had been permitted to let their currencies float.
ReplyDeleteYou are right to be furious about quantitative easing - it is simply inflation by another name.
Germany of course has memories of the rampant inflation of the 1930s during the Weimar Republic and the social unrest it caused which was a major factor in the rise of Hitler.
Inflation is the big enemy and I concur, it is the responsibility of government to deal with it.
John