Zander
Platinum Member
Forest, meet the Trees. Looking at the jobs numbers and getting excited is akin to saving a photo album while your house burns down.
The problem is DEBT. We have too much, the entire world has too much. The US has run annual budget deficits for about 80 years straight with few exceptions. Usually it is not a problem- the key is to keep the annual deficits below the rate of GDP growth. If you do, then deficits are manageable. You have more growth in the economy than increase in debt and the ratio of debt/GDP remains the same or gets lower.
Where it gets dicey is in times like now- we have very little or negative GDP growth and the cyclical deficit increase (that is the deficit spending made during times of economic downturns) is overwhelming. TARP, QE, Stimulus, etc..
In 2 short years we've gone from roughly 60% debt/GDP to 100%! The only way out of the mess is through government austerity - but that will send us into a recession* (see below) and the politicians do not have the long term perspective required to make those decisions. They want to be re-elected! They don't care about the country beyond the next election cycle.
We have tough choices to make about taxes, entitlements, and the overall role of government. 2012 will be all about those decisions.
* GDP = C + I + G + Net exports
C= Consumption (consumer and business) I=investment G= Government spending.
If we freeze spending at current levels we will have 8% less spending next year. The government spends 25% of GDP currently so 8% less spending will reduce GDP by at least 2%. With GDP growth at less than 2% now- this will mean a recession.
The problem is DEBT. We have too much, the entire world has too much. The US has run annual budget deficits for about 80 years straight with few exceptions. Usually it is not a problem- the key is to keep the annual deficits below the rate of GDP growth. If you do, then deficits are manageable. You have more growth in the economy than increase in debt and the ratio of debt/GDP remains the same or gets lower.
Where it gets dicey is in times like now- we have very little or negative GDP growth and the cyclical deficit increase (that is the deficit spending made during times of economic downturns) is overwhelming. TARP, QE, Stimulus, etc..
In 2 short years we've gone from roughly 60% debt/GDP to 100%! The only way out of the mess is through government austerity - but that will send us into a recession* (see below) and the politicians do not have the long term perspective required to make those decisions. They want to be re-elected! They don't care about the country beyond the next election cycle.
We have tough choices to make about taxes, entitlements, and the overall role of government. 2012 will be all about those decisions.
* GDP = C + I + G + Net exports
C= Consumption (consumer and business) I=investment G= Government spending.
If we freeze spending at current levels we will have 8% less spending next year. The government spends 25% of GDP currently so 8% less spending will reduce GDP by at least 2%. With GDP growth at less than 2% now- this will mean a recession.