I always love it when central bankers try to wax poetic. Oh yeah, usually they don’t which is why this one is supposed to be interesting, but really, he’s not saying anything really new.
Mervyn King, Governor of the Bank of England, fears that America shares many of the same fiscal problems currently haunting Europe.
No shit. Really. How much money do you get paid to figure that one out? Hell, I could have told you that for free. Of course I don’t have any political power or any money to buy political power but really, would it have been that hard to look around and see that all the developed countries have been promising too much for too long and the bill is finally coming due?
And being the Euro type, he then promptly falls into the typical pol mode by wanting to raise taxes.
within the Euro Area it’s become very clear that there is a need for a fiscal union to make the Monetary Union work. But if that is to happen there needs to be also a mechanism to enable other countries that have lost competitiveness to regain competitiveness. That requires actions, probably structural reforms, changes in wages and prices, in the countries that need to regain competitiveness. But it also needs a solid and expansionary state of domestic demand in the stronger economies in Europe.
Dude, it’s not the income side of the ledger that’s the problem, it’s the expense side. Stop spending so much money. It’s really not rocket science.
And that of course is my biggest problem with the US. Most pols, and that includes quite a few republicans, believe that if we raised taxes we’d be all set. From where I sit, having watched government program after governmet program always get larger, the problem is all the programs to begin with. If you create a new program, I’m looking at you health care reform, then we will always have a spending problem.
Always remember, you can raise income, ie taxes, or cut spending, to get a balanced budget. 99% of all politicians, would rather try to increase taxes than be responsible and cut spending.
All in all, a rather unremarkable interview with a central banker. Hell, he could have been any moderate/liberal US politicians by his stands. A pox on all their houses. Now then, where’s the beer.