Tuesday, September 16, 2014

Enough already with Europe -- lets trash America instead!

So apparently France's prime minister (Manuel Valls) said that its economy was "screwed" if there was no recovery within the next 3-6 months.  personally, I think that he's now calling "higher powers" in the hope of a devine intervention... He wishes!

Out in in 'merica the situation is all rosy, at least if you look at the stock market which continues to define any logic.  There is no good news, aside from stock buy back -- that's it aside from a few companies that are doing well (looking at you Disney) but the real game has been the stock buy back. Why do better if you can just reduce the float!!!

The reality is that without wage growth in the middle class there can be no economic boom.  Moreover, the big spending now is in "education" as John Oliver pointed out the $1 trillion student debt has been mostly used to attend private (for profit) universities -- who according to Oliver spend nearly twice as much on advertising than they do on the faculty's salaries!  That doesn't produce much growth -- but provides young people with massive debt, and in many cases degrees of dubious quality.

The reality is that with the growth in wage disparity between the 1% and the rest (no wage growth for the rest, and a 25% a year increase for the 1%) there is no way for the economy (one that is based on consumption) to grow.  Moreover, with the GOP's "war against Democrat spendings" there is no spending on infrastructure.  Bridge and viaducts are failing down or considered "in grave danger" but there is no money at the local level, at the state level or at the federal level.

One of my favorite countries is Paraguay, the economy is full economic growth, 10% a year with a massive shift from agricultural labour to city employment.  All great, but with a 10% income tax rate and minimal property taxes (which is great for rich people) there is literally no infrastructure spending.  There are few if any traffic lights in Asuncion, the main (and only) state road is in such poor shape that to call our "Canadian potholes" a calamity would be a gross exaggeration;  we are talking massive holes (up to a foot deep.  Ranch owners fly out to their properties (which are immense -- for good reasons) and are far flung anyway, but goods transportation by road is greatly hampered by these poor infrastructure (there is no rail network in the country)

Traffic in Asuncion is becoming a problem.  The 5km road to the airport can, and has taken me, more than 2 hours.  There are real economic costs at not having infrastructure.  America is discovering the cost of having crumbling infrastructure.  $20 Trillion -- that's the total (an expense that the GOP is apparently glad to pass on to the next generation.

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