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Sunday, July 24, 2011
DEBT LIMITS, DEFICITS BUT WHAT ABOUT EMPLOYMENT?
The economic news has been consistently glum over the last several weeks with the headlines oscillating between international hand-wringing over the financial bail-out for Greece and the deadlock in the United States (within Congress and between the Republican-led House of Representatives and the White House and Senate) over debt limits and deficit reduction measures.Naturally, the news and attendant commentary has affected different places in different ways. For Greece the discussion is around the effect that the imposed austerity measures will have on the average Greek citizen. In France, the discussion is whether France will have to suffer as a result of helping bail-out Greece. During my recent business trip to Australia I was greatly surprised how much the talk about Greece's problems and the USA's politicking were depressing the economic outlook of consumers and business in "the lucky country" when its economy is actually in good shape and its main fear should be whether the Chinese economy continues to steam along.
Back at home, if one can ignore the political theater, it is easy to see that much of what is being discussed (regarding debt limits and deficit reduction) is actually very important for the future of the country; chopping the deficit keeps the country's finances in good shape, reducing wasteful government spending is good housekeeping, keeping taxes low encourages private enterprise to both employ and providing an adequate safety net for the poor and needy elderly is both humane and socially responsible.
Yet as long as these debates rage on, investors and consumers become more anxious, the economy fails to grow, unemployment remains high and the construction industry wallows in deep recession. Hopefully our politicians will quickly settle on a comprehensive deficit reduction package, agree to lift the debt ceiling and then return to the fundamental task of getting the American economy back on its feet and Americans back to work.
posted by The QS