Comments »Americans split on almost every important issue facing Washington, but they agree on this much: Republicans and Democrats share blame for the failure of the Congressional “super committee,” and the resulting automatic budget cuts are unacceptable.
In CNBC’s new All-America Economic Survey, a robust 62 percent majority blamed the two parties equally for the committee’s inability to reach a compromise on $1 trillion to $2 trillion in deficit reduction over the next 10 years. That includes more than 70 percent of Republicans and independents, though nearly half of Democrats and a majority of Occupy Wall Street supporters blame Republicans in particular.
Moreover, Americans overwhelmingly reject the consequences of that failure – $1.2 trillion in automatic budget cuts, divided equally between military and non-military programs. In the legislative deal Democrats and Republicans struck to create the super-committee, those cuts were intended to be so unpopular that they would force super committee members to reach a bi-partisan deal.
The survey shows that Washington got it half right – the part about the unpopularity of automatic cuts. Just 16 percent of Americans favor proceeding with the cuts, which are due to take effect in January 2013. Some 25 percent prefer an alternative plan with deeper budget cuts.
A 43 percent plurality favors an alternative plan containing fewer budget cuts. In a reflection of the limited appetite for cutting defense at a time when the nation is at war, even a 39 percent plurality of Republicans prefer fewer cuts than the automatic reductions call for.
That broad opposition to the automatic cuts underscores the opportunity Congress has over the next year to devise a new deficit-reduction plan.
EU must empower the ECB
Comments »Martin Wolf, chief economic commentator for the Financial Times and long time critic of the Eurozone is optimistic that something tangible will emerge from the crucial, critical, and “endlessly hyped” two-day summit between EU officials commencing today. Alas, tangible and effective are wholly different concepts.
Wolf says the options are simple: the Eurozone can do the bare minimum to ward off economic chaos or come up with a maximal, comprehensive solution that is obviously never going to happen. The half-baked option, according to Wolf, is to “give enough cover, in terms of longer run discipline and longer run reform… to allow the ECB to start intervening in government bond markets in a much more aggressive way”.
By way of translation, Wolf’s idea is akin America’s method for cutting our budget. First you posture, yell, argue and point fingers. Next you refuse any meaningful compromise in the now, leaving the hard decisions to your political successors. Finally you chuck money at the problem in a fiscally reckless manner designed to do nothing more than buy time.
Barring a wild modification of human and political nature this bare-boned solution is what’s going to be detailed for us Friday afternoon. The problem with merely prolonging the crisis is that ultimate success is entirely reliant on an economic recovery in Europe to enable member nations to buy things from one another even as half of the Eurozone is facing mandatory austerity measures.
In short, the idea is to give countries less and hope they buy more while somehow not incurring more debt. It’s an idea akin to he ECB becoming a Federal Reserve cover-band playing tired versions of America’s failed policies. Regardless, Wolf says it’s the Eurozone’s only hope.
Brazil’s CPI Rises Quicker Than Expected
A Strong Yen Kills Japanese Machinery Orders
Machine orders fell for a second month confirming a global slowdown…or at least a flight to quality currencies like the yen.
Comments »Australia Had its Worst Job Growth Data in 15 Years; Doves Cry Rate Cut
The U.S. Economy is on Track to Outperform
Hopefully we will outperform as sales in every category have beaten expectations. Hopefully the U.S. can decouple from the European nightmare.
Comments »Jeremy Grantham: US Must Brace for 5 More Lean Years
“GMO Chairman Jeremy Grantham says we’ll have at least five more lean years.
“Sadly, I feel increasingly vindicated by my “seven lean years” forecast of 2½ years ago,” Grantham writes in a note to investors.
“The U.S., and to some extent the world, will not easily recover from the current level of debt overhang, the loss of perceived asset values, and the gross financial incompetence on a scale hitherto undreamed of.”
Comments »Nomura Out With Market Moving Factors for 2012
China Will Suffer Dramatic Pressure in Export Market as Global Economy Slows Down
Australia’s Economy Grows More Than Expected
The World May Skim the Best America Has to Offer
We used to collect the best of the worlds people. This pattern may be in reversal formation.
Comments »AXP CEO Tells the CFR That Retailers are Upbeat About Holiday Sales
Jim Rogers: US Falling Into ‘Deeper Trouble,’ Faces 2013 Depression
When the depression does not come will the forecast be pushed out another year or two ?
Comments »German Industrial Orders Blow Away Estimates
Germany went from a negative 4.6% to a positive 5.2%…somehow this failed to rally the DAX.
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