In a bit of an unprecedented invite, Timothy Geithner the US Treasury Secretary was invited to the European Union meeting of finance ministers and promptly told the Europeans to get their house in order.
This from someone who cannot sort his own problems out at home.
Whenever you see politicians and high ranking officials pontificating about other people’s problems you can bet your bottom dollar (if there’s any left) that their own domestic problems are too complicated for them to address. The trouble is that other peoples’ problems are usually as, if not more, complicated than your own.
Maybe Geithner was just looking to do what the IMF had done to the US a few weeks ago. Or maybe he just wants the Eurozone to get on and integrate, get some sort of Eurobond going either real or virtual and be in a position to start buying US stuff.
But who points at who is of no consequence. This does not get away from the fact that the whole economic pile is on the verge of collapse. In fact it’s already on that out of control handcart speeding to hell.
There is just too much debt and there are only two ways to deal with debt:
- Pay it.
The first looks impossible.
The US alone has a huge $14 trillion and growing debt pile and has just started a ‘jobs programme’ which, as gainpainscapital.com points out, is the same as paying $250,000 to create every job. As far as they are concerned the US is going to default and it is hard to see any other outcome.
So why should anyone listen to Geithner then?
We now see all our politicians racing round the world trying to prop up the system and searching for that elusive ‘growth’, but will any of this actually benefit the people they purport to serve?
We have all had our future money/work spent for us setting up an unsustainable society. It had to come to an end. We keep being told that growth is what we need to pay for the now, the future and the debt we have accumulated. But that’s how we got here and we haven’t paid for the last lot of growth yet, so how are we going to pay for more? Building growth on debt has been proved to be the wrong thing to do.
The stark truth is that we now need a period of managed contraction and that will hurt a lot of people in the short term. No politician will contemplate that; they would rather have a quick fix now and look good, if only for a few weeks/days. They know that a managed reduction in the goods and services we have got used to will be unpopular to the point of civil unrest. Unless they can do what politicians should be good at, selling the long term vision.