People get use to the subsidies and the bailouts and so do the politicians since they have to take care of their constituents. Now there should be gradual pain instead of having an abrupt one, since it will cause more devastation. We need to start weaning off people from the whole notion of stimulus packages and benefits, since it will addictive. But like somebody said, what if they issue debt and nobody came to buy it. Whatever the benefits and stimulus that we are giving is not paid for and it is being funded by mostly by outside investors who just care about their return on investment. If we are so fond of benefits, we should start generating funds from within the country (which we are not doing right now).
So as I said before, next time this kind of extraordinary comes, we will have less ammunition in our arsenal to deal with it, since we have exhausted most of it during this recession. The sooner we start building up (meaning reducing our debt and increasing our revenue), the sooner we will be ready for the next crisis (which surely will come, no matter what the economists say otherwise).
Sunday, July 4, 2010
Another Bailout possible?
There was a news article stating that the BIS (Bank of International settlements based in Switzerland- the so called central banks bank) has stated that if there is another economic crisis and need for another bailout, most of the countries would not be able to do it and only the IMF and U.S.(maybe) will have to step in to save the world. Actually the article was specifically stating that the U.K. (which has spent nearly $1 trillion on bank bailout) would break if it is asked to have another massive bailout.
I wholly agree with this scenario. The governments of the world have put so much money into the system that if the next crisis comes, we will not have enough ammunition to stop the decline. Who will invest in our bonds or bail out countries if they are already so much in debt. You can’t expect investors to keep on buy government securities if they feel that they will not get adequate return or maybe no return. Interest rates will have to go up, spending will be cut drastically and taxes will be raised way too much. The welfare state which the western industrial countries are so proud of will be a thing of the past as it will be curtailed drastically beyond what people will be expecting. The question here is how much debt the governments can take on without destroying their finances. On top of this, many economists and commentators are arguing for more money to shore up economies, since they say that once the economy grows, then we can take care of debt. But here is another case, once you put people through subsidies, it does not go away.
I wholly agree with this scenario. The governments of the world have put so much money into the system that if the next crisis comes, we will not have enough ammunition to stop the decline. Who will invest in our bonds or bail out countries if they are already so much in debt. You can’t expect investors to keep on buy government securities if they feel that they will not get adequate return or maybe no return. Interest rates will have to go up, spending will be cut drastically and taxes will be raised way too much. The welfare state which the western industrial countries are so proud of will be a thing of the past as it will be curtailed drastically beyond what people will be expecting. The question here is how much debt the governments can take on without destroying their finances. On top of this, many economists and commentators are arguing for more money to shore up economies, since they say that once the economy grows, then we can take care of debt. But here is another case, once you put people through subsidies, it does not go away.
HAPPY BIRTHDAY U.S.A.- 4th of July, 2010
Today we celebrate the Independence Day of our beloved country America. Since the first birthday, we have grown from 13 states and now we are 50 states plus several territories. We are the world’s richest and most powerful country which is the envy and jealously of the world. Although we have our share of problems (like everybody does) but still we are leading the world and everybody wants to come here even those who harbor sinister motives. We should be proud of our country. We should also be remembering all our fellow countrymen and women serving in our armed forces abroad and here to ensure our freedom and safety. Again Happy Birthday, America.
Friday, July 2, 2010
Environment vs. Jobs-2
So what to do then. It is a really hard choice. Although the so called Green jobs which are supposed to be replacing the old ones are environmentally friendly but are the older workers who are laid off or will be laid off due to environmental restrictions ready to be trained in the new (emerging) technology. Are these new jobs in the places where people will be willing to get hired or relocate? Will they be enough to replace the old salary? How will the workers compete with the developing world where there is no or less environmental restrictions. Are we putting our workers at a disadvantage with regard to the work from overseas? Who is to ensure that the environmental restrictions or regulations are not being cheated by other countries? Who will measure the success or failure of the regulations and what will be rewards and penalties due to it.
Will the developing world demand compensation for the loss of jobs if they implement the environmental regulations. Who will educate the people about what is good or bad for the environment. How will the environmentalists (or whoever is in charge of regulating) convince the people that their families will be taken care of if they stop degrading the environment? Will the developing world follows the dictates of the western world with regards to the environment. Will the citizens of the developed world ready and willing to compensate and give grants to the developing countries to improve their environment. How will the world react to restrictions being placed on common products which degrade the world faster like cars and airplanes?
These and numerous other questions are not being addressed, just the warnings and predictions and scare tactics about the environment. Unless something concrete is given to people to see with their own eyes, there will always be conflict between environmentalists and skeptics.
Will the developing world demand compensation for the loss of jobs if they implement the environmental regulations. Who will educate the people about what is good or bad for the environment. How will the environmentalists (or whoever is in charge of regulating) convince the people that their families will be taken care of if they stop degrading the environment? Will the developing world follows the dictates of the western world with regards to the environment. Will the citizens of the developed world ready and willing to compensate and give grants to the developing countries to improve their environment. How will the world react to restrictions being placed on common products which degrade the world faster like cars and airplanes?
These and numerous other questions are not being addressed, just the warnings and predictions and scare tactics about the environment. Unless something concrete is given to people to see with their own eyes, there will always be conflict between environmentalists and skeptics.
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