Results 1 to 6 of 6

Thread: Merkel Tells Obama Spending Cuts to Boost Economy, Not Put Brake on Growth

  1. #1
    Guru

    Join Date
    Jun 2006
    Last Seen
    05-13-11 @ 09:01 PM
    Gender
    Lean
    Independent
    Posts
    4,075
    Blog Entries
    3

    Merkel Tells Obama Spending Cuts to Boost Economy, Not Put Brake on Growth

    Link
    Merkel Tells Obama Spending Cuts to Boost Economy, Not Put Brake on Growth - Bloomberg

    Quote(Chancellor Angela Merkel championed German export strength as “the right thing” for her country, spurning President Barack Obama’s call to boost private spending as both leaders prepare for Group of 20 talks.)

    Now if only Obama is willing and able to learn he may yet be able to turn 180 degrees on the damage his idea's on the US economy are causing.

    Not holding my breath.

  2. #2
    Sage

    Join Date
    Oct 2007
    Location
    New York
    Last Seen
    12-13-17 @ 12:40 PM
    Gender
    Lean
    Centrist
    Posts
    11,691

    Re: Merkel Tells Obama Spending Cuts to Boost Economy, Not Put Brake on Growth

    Quote Originally Posted by jujuman13 View Post
    Link
    Merkel Tells Obama Spending Cuts to Boost Economy, Not Put Brake on Growth - Bloomberg

    Quote(Chancellor Angela Merkel championed German export strength as “the right thing” for her country, spurning President Barack Obama’s call to boost private spending as both leaders prepare for Group of 20 talks.)

    Now if only Obama is willing and able to learn he may yet be able to turn 180 degrees on the damage his idea's on the US economy are causing.

    Not holding my breath.
    The Chancellor could be correct with respect to Germany's needs. Although spending increases boost aggregate demand, there are levels at which additional risk premia (reflected through higher interest rates) associated with debt burdens can more than offset the benefits associated with spending increases and the resultant increase in aggregate demand. In general, if a country is debt intolerant (markets won't accept its taking on high levels of debt) or faced by growing financing concerns, it can be highly vulnerable to a spike in interest rates.

    There comes a point where the rise in interest rates from maintaining a given fiscal policy would lead to less economic growth than an alternative approach that would imposing tax hikes and/or spending reductions. When a country reaches that stage, raising taxes and cutting spending is more compatible to growth than maintaining a fiscal course that is deemed increasingly risky. Tax hikes/spending cuts can increase confidence about a country's repayment capabilities leading to lower interest rates than would otherwise be the case. That, in turn, would translate into lower costs of capital for companies and the government (including a lower risk of default given the somewhat easier debt service requirements). Such lower costs of capital would lead to gains in economic output that would exceed the otherwise typical contractionary impact associated with tax hikes/spending cuts.

    IMO, given the fiscal situation in Europe and that area's brush with the Greek debt crisis, it makes good sense for Germany to pursue fiscal consolidation. Some of Europe's highly indebted countries do face an above average risk of deflation and such a development could complicate prospects for austerity program successes.

    Barring an unexpected end to the ongoing moderate economic recovery in the U.S., I believe fiscal consolidation should be initiated in the U.S. next year. Fiscal consolidation include both revenue and expenditures, though with greater emphasis on expenditures reductions. It should also include the introduction of a credible strategy that would aim to address the nation's long-term fiscal imbalances with necessary reforms being pursued over the medium-term. Prospects for such fiscal consolidation in the U.S. are not encouraging.

  3. #3
    Tavern Bartender
    Constitutionalist
    American's Avatar
    Join Date
    Mar 2006
    Location
    Virginia
    Last Seen
    12-15-17 @ 10:49 AM
    Gender
    Lean
    Conservative
    Posts
    76,323

    Merkel Tells Obama Spending Cuts to Boost Economy, Not Put Brake on Growth

    Link

    By Tony Czuczka - Jun 22, 2010
    Chancellor Angela Merkel championed German export strength as “the right thing” for her country, spurning President Barack Obama’s call to boost private spending as both leaders prepare for Group of 20 talks.
    Merkel, addressing a business audience in Berlin today, said she told Obama in a phone call that cutting government debt is “absolutely important for us,” exposing a second point of contention ahead of the June 26-27 G-20 summit in Canada.
    Reducing the budget deficit by 10 billion euros ($12 billion) per year “won’t put a brake on the world’s economic growth,” Merkel said, relating what she told Obama yesterday. Germans are more likely to spend money if they feel the government “is taking precautions” to ensure solid finances, she said.
    Four days before world leaders meet in Toronto, Germany is heading for conflict with the rest of the G-20 over tighter financial regulation, a banking levy and U.S. calls to boost growth rather than cut debt.

    This is absolutely precious, since the left wants us to emulate Europe. Merkel is correct of course, but Obama's arrogance will keep his ears shut to this type of advice.
    "He who does not think himself worth saving from poverty and ignorance by his own efforts, will hardly be thought worth the efforts of anybody else." -- Frederick Douglass, Self-Made Men (1872)
    "Fly-over" country voted, and The Donald is now POTUS.

  4. #4
    Outer space potato man

    Join Date
    Feb 2010
    Last Seen
    Yesterday @ 11:29 PM
    Gender
    Lean
    Undisclosed
    Posts
    51,849

    Re: Merkel Tells Obama Spending Cuts to Boost Economy, Not Put Brake on Growth

    Quote Originally Posted by American View Post
    Link


    This is absolutely precious, since the left wants us to emulate Europe. Merkel is correct of course, but Obama's arrogance will keep his ears shut to this type of advice.
    Which parts of being like Europe am I supposed to support now? I didn't get the memo.
    He touched her over her bra and underpants, she says, and guided her hand to touch him over his underwear
    Quote Originally Posted by Lutherf View Post
    We’ll say what? Something like “nothing happened” ... Yeah, we might say something like that.

  5. #5
    Guru

    Join Date
    Jun 2006
    Last Seen
    05-13-11 @ 09:01 PM
    Gender
    Lean
    Independent
    Posts
    4,075
    Blog Entries
    3

    Re: Merkel Tells Obama Spending Cuts to Boost Economy, Not Put Brake on Growth

    Quote Originally Posted by Deuce View Post
    Which parts of being like Europe am I supposed to support now? I didn't get the memo.
    Oh dear, don't tell me Obama was remiss again with dissemination of information?

  6. #6
    Outer space potato man

    Join Date
    Feb 2010
    Last Seen
    Yesterday @ 11:29 PM
    Gender
    Lean
    Undisclosed
    Posts
    51,849

    Re: Merkel Tells Obama Spending Cuts to Boost Economy, Not Put Brake on Growth

    Quote Originally Posted by jujuman13 View Post
    Oh dear, don't tell me Obama was remiss again with dissemination of information?
    I missed the last Liberal Conspiracy Meeting.
    It's confusing. There's a lot of countries in Europe with varying laws and financial situations. Which one are we supposedly trying to emulate?
    He touched her over her bra and underpants, she says, and guided her hand to touch him over his underwear
    Quote Originally Posted by Lutherf View Post
    We’ll say what? Something like “nothing happened” ... Yeah, we might say something like that.

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •