As individuals, we learned the lessons from our parents: avoid debt, save, spend wisely, and tithe. As a result, our personal debt has been reduced by more than $1T since 2008. As a percentage of GDP, it is at its lowest level since 1995. We get it, as householders. Do we get it as taxpayers?
Meanwhile, our hillbilly cousins in Western Europe are against the ropes. Their debt is actually higher than ours – if that is possible. Their response? An increase in taxes for their wealthiest citizens (do you think they might avoid these increases?) and an increase in their ‘national sales tax’, or VAT. Only tiny Estonia, stalwart Ireland and the industrial powerhouses of the Netherlands and Slovakia have resisted tax increases. Guess which nations are avoiding the European recession.
The UK and Sweden are (not so quietly) congratulating themselves for never having joined the Euro celebrations in the first place. The TGV has left them standing on the Bahnh of strasse, to their glee.
Your best advice?
Stand down from more debt creation. Stop the insanity. Realize that governments, despite their best intentions, rarely create wealth, nearly always destroy wealth. Rent seeking corporations will always game the system. DC is no match for NYC; Brussels cannot compete against London. The story here is about raw power, nothing else. The figures are disguises for the real decisions. This is not about dollars, Euros, Pounds or Kroner.
Our current government solution? We ‘stand ready to do our part to help them resolve this issue’. A flood of liquidity is offered – to bail out the lenders who ‘cannot fail’. Banks and governments are made good on their losses. Millions are unemployed, continue to expect the impossible in retirement benefits and demand justice. Good luck with all that.
We have a cold winter ahead. Yes, the climate is changing, as it always does. Let’s hope that the change in power is towards good stewardship: Frugal living, Debt avoidance, Saving