- Prior to 2007, as Head of the U.S. Government Accountability Office (GAO) David Walker said that the U.S. economy was unsustainable and made some remarkable claims regarding fiscal irresponsibility
- David Walker runs investigative arm of congress
- Walker believed that the biggest peril facing the nation was being ignored
- Walker argued that current standard of living was unsustainable
- Walker called it the dirty little secret that in Washington everyone knew
- He concluded that politicians were guilty of fiscal irresponsible
- After trying to argue his case, he gave up on elected officials and took to the streets to present the facts
- He embarked on what he called a "Fiscal Wake Up Tour"
- Walkers compares the fiscal irresponsibility to charging expenditure to a credit card and expecting our grandchildren to pay for it
- Argues that we are living in fiscal denial
- The Government has committed itself to massive entitlement programs that we cannot afford
- 78 million baby boomers reached sixty-two and started retiring in 2008
- Walkers maintains that the status quo was a tsunami ready to swamp the republic
- Biggest challenges are social care and Medicare
- Heath care problem is much more significant than social security
- When Medicare was expanded in 2005 by including prescription drug coverage, Walker regarded the move as fiscally irresponsibe
- The new legislation would extend debt to over eight trillion dollars in the near future
- The country cannot afford the promises that it has made
- The system is unsustainable
- Can expect people to disagree, but hardly anyone does except for a small group of economists that say that problem overstated
- Fed Reserve Chairman Ben Bernanke stated that growth alone is unlikely to solve the country's fiscal challenges
- Walker calls the behavior fiscally immoral
Wednesday, June 16, 2010
- European Parliament committee has approved the European Union’s controversial hedge fund regulations in the form of a new bill
- European Parliament will seek to impose strict new reporting and custody rules on hedge funds and private equity funds, as well as possible leverage and borrowing limits
- The bill includes the so-called “passport” that would give foreign hedge funds that meet certain requirements access to all 27 EU countries
- Members of the British Conservative Party voted against the measure.
- Hedge funds accused of exacerbating the Greek debt crisis by betting on its default
- Private-equity firms accused by politicians in Germany of stripping the assets of the firms they bought.
- Measure could constrain European pension fund returns and bring about retaliatory measures against the EU from other countries
A question that needs to be assessed is whether the Euro currency, which is approximately ten years old, is sustainable.
Futurist conference keynote speaker and author Patrick Dixon shared his view on the future of the Euro at London Stock Exchange UK Trade and Investment - Nordic Business Awards. He asks a fundamental question. Why is it that Greece and Ireland are experiencing severe economic difficulties?
Although there have been many broader issues that have impacted these countries that relate to the global downturn, there is a fundamental truth that needs to be addressed. All these countries that are within the Eurozone, by definition have the same currency, interest rates, and cost of borrowing. The cost of borrowing is set by the European Central bank. The fundamental lever that drive most national economies in terms of driving down demand during periods of inflation, or pumping up demand during a period of recession, has disappeared because it is impossible for an individual country within the Eurozone to increase or decrease its interest rates. When there are needs that are specific to a country that require adjustment using traditional central bank mechanisms, there is very little that can be performed by an individual country, as the needs of that specific country may be very different to other countries within the Eurozone. Consequently, it will always be a victim of the policy that is set by the European Central bank. This represents a huge challenge.
In an attempt to achieve a deeper understanding of the issues that impact the Euro, the following topics need to be addressed:
- European Union trends
- Euro crisis in Greece
- Monetary union constraints in high inflation or deflation
- Role of European Central Bank in balancing needs of high growth and low growth economies
- Contrasts between Ireland, Greece, Portugal, Spain, Germany, France, Italy and countries which more recently joined
- Loss of sovereignty to Brussels
- Political issues in controlling budget deficits or imposing budget cuts on an unwilling nation
- Political unrest and threat of strikes or instability
- Challenges for the future