Reading Robert Reich warn day after day that government spending cuts are exactly the opposite of what the worlds economies need now, and that such austerity is likely to drive the world's fragile economies into another recession, is like watching a Twilight Zone Episode -- or seeing a slow motion disaster approaching where the victims get repeated warnings of how to avoid the impending disaster, and not only ignore it, but arrogantly denigrate the messengers trying to avert the calamity, and do the very things that bring on the disaster.
It seems likely that history will record our political actions this year as similar to the Smoot-Hawley Tariff Act, of 1930, where trade tariffs enacted to protect US farmers during a recession, are blamed for greatly exacerbating a downturn into the Great Depression.
New data today from Europe shows all major economies there slowing to a crawl. Germany's growth fell to 0.1 percent in the second quarter, down from 5%, in the first. The whole euro zone fell from 0.8 percent to 0.2.
In his blog, today, Robert Reich explains how he seesHow Austerity Is Ushering in a Global Recession.
Not only is the United States slouching toward a double dip, but so is Europe. New data out today show even Europe’s strongest core economies – Germany, France, and the Netherlands – slowing to a crawl. ....We’re on the cusp of a global recession. ... Policy makers be warned: Austerity is the wrong medicine.
In Reich's view only part of Europe's loss of confidence is due to the debt crises in its weaker countries such as Greece, Spain, Portagal, and Italy. A compounding vicious cycle of falling exports elsewhere in the world.
The biggest problem, however, is this wrong headed imposition of austerity at a time we need stimulus.
Europe – including Britain – have turned John Maynard Keynes on his head. They’ve been cutting public spending just when they should be spending more to counteract slowing private spending. ...
Cutbacks by state and local governments have all but negated the federal government’s original stimulus, ... economies can fall into vicious cycles of slower growth, lower tax revenues, spending cuts, and even slower growth.
If America, Europe, Japan, Asia, Latin America all pull in our spending reins at the same time, we could induce a self-fulfilling prophecy, and a global vicious downward economic spiral.
But when growth is slowing so dramatically and unemployment is already high, monetary policy can’t possibly do it alone.
Without an expansionary fiscal policy, low interest rates have little effect. Companies won’t borrow in order to expand and hire more workers unless they have reasonable certainty they’ll have customers for what they produce. And consumers won’t borrow money to spend on goods and services unless they’re reasonably confident they’ll have jobs.
We need to change the current paradigm of our political leaders based on the false notion that cutting government spending is going to create jobs.
Cutting government spending will not create jobs, but destroy them.
How low will our global economies have to go before our politicians wake up and change course?
So when folks wonder how many times Robert Reich will repeat the same message, the answer is probably, until our political leaders listen and start enacting policies that help us grow jobs, wages, and the whole economy.
Until then we can keep whistling that Twilight Zone theme music.
Too Dee Doo Duu,
Too Dee Doo Duu.
As we watch our Titanic-like ship of state head right for a large iceberg field ahead.
3:28 PM PT: Robert Reich is on Reverend Sharpton's program saying we need to counter the Republican lies that smaller government leads to more jobs.
He says because we know the GOP will oppose anything we propose we should propose a jobs bill that is bold, and large, so we can be seen as fighting for the working class, and force them to vote against it.