Good Reads: So Western nations have failed to cut spending. What's next?
With a US Congress 'super committee' unable to cut spending and Britain's government also struggling, the West is looking like a wastrel; and Cairo's Tahrir Square seethes once more.
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… borrowing in itself isn't necessarily good or bad. When used with moderation and for useful purposes, credit is actually a major fuel for economic growth. The word "leverage," employed by finance types as a synonym for debt, rightly implies a tool – a kind of force multiplier.Skip to next paragraph
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But when debts grow too large, the multiplying effects can turn negative. And the fallout can be stagnation that lasts for years. That's the risk facing the US and world economies today.
If it’s any comfort, the US is not the only country loaded down with debt. In today’s Telegraph, James Kirkup and Robert Winnett write that Britain’s conservative Prime Minister David Cameron is starting to come to grips with the amount of debt that Britain has accumulated through increased spending and broad tax cuts. In a speech to the Confederation of British Industry, Mr. Cameron said that his center-right coalition government was struggling to erase the British government’s “structural deficit” by 2014, as planned.
“Getting debt under control is proving harder than anyone envisaged,” he said. “High levels of public and private debt are proving to be a drag on growth, which in turn makes it more difficult to deal with those debts.”
Perhaps Cameron should borrow from the French center-right government’s new campaign slogan, as described in the Paris newspaper, Le Monde: "Produire plus et dépenser moins," or in the language of Shakespeare, “produce more and spend less.” Ah, but doesn't everything sound better in French?
With less money at their disposal, the economies of the US, Britain, and Europe will have less money for development aid and wars against terrorism, and there are those in the developing world who would argue that this is a good thing.
And it’s not certain whether the tens of thousands of protesters who have returned to Cairo’s Tahrir Square would see the decline of the West as a bad thing. But as the New York Times’ David D. Kirkpatrick writes, their anger seems to be aimed at domestic problems, specifically the Egyptian military which has quietly retained control over the Egyptian government, even after the apparently successful Cairo Spring pushed Egyptian President Hosni Mubarak from power.
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