Fascinating to read from our contributor Alan that one of the biggest and most important  financial events is about to happen in the US with world changing effects and this is the world’s finest news organisation’s analysis:

‘Sorry, there are no results for  ‘taxmageddon’  in the category ‘News’.’

In the US in January 2013 there looms a massive financial decision….a ‘cliff edge’ moment, when the realities of the US economy will strike home.

Policymakers are facing difficult trade-offs in formulating the nation’s fiscal policies. On the one hand, if the fiscal policies currently in place are continued in coming years, the revenues collected by the federal government will fall far short of federal spending, putting the budget on an unsustainable path. On the other hand, immediate spending cuts or tax increases would represent an added drag on the weak economic expansion. ‘

The US has been running its economy on Plan A….which is the Ball’s Plan B here…..it is based on tax cuts and stimulus spending. Now those chickens are coming home to roost and a decision has to be made.

All that spending hasn’t really worked, it gives the illusion of growth but based on massive debt,  now they must decide either to continue down that road and grow the deficit further or raise taxes and make cuts in spending…..to reduce the deficit by 60% by 2014.

The BBC have avoided all talk of this as far as I can see, at least in the UK.  Why?

The BBC love a good stimulus on the quiet.

The fact that the Americans are in such a dilemma, are panicking about it, tells you everything…..the ‘stimulus’ programme hasn’t worked…the massive government subsidies haven’t worked….if they had the answer would be easy….change nothing…keep on with the low taxes and high borrowing (half US government spending is borrowed).

But no…..the economy is at the ‘cliff edge’…and that doesn’t sound like a good basis for an economic plan unless you dated Ed Balls and now work for the BBC.

Subsidies produce growth and jobs….really?   Well yeah….look at all those Green jobs from wind farm development and solar panels.

Let’s look how that went…..every so called green job cost 3.7 real jobs as money was diverted from the real economy….and look what happened when the subsidies were cut….the solar panel firms went bust….because their business was unsustainable in the real world.

That’s the key word…sustainable…once the subsidies are withdrawn can they continue to trade?

And of course the subsidies have to come from somewhere…Balls is yet to quantify exactly how he intends to fund his Brownian Motion where the money supply mysteriously moves money around in an expansive and random manner in the economy with no apparent relation to any outside influences at all.

The US  Congressional Budget Office states in clear language the options……continue with the stimulus and you will get 4.4% growth in the first year, make cuts and increase taxes and you will have 0.5% growth in year one and 2.3% in year two and the deficit will be cut enormously.  Carry on with the stimulus and it gives good apparent ‘growth’ but that is unsustainable…..‘Such a path for federal debt could not be sustained indefinitely, and policy changes would be required at some point. The more that debt increased before policies were changed, the greater would be the negative consequences—for the nation’s future output and income, for the burden imposed by interest payments on the federal debt, for policymakers’ ability to use tax and spending policies to respond to unexpected challenges, and for the likelihood of a sudden fiscal crisis.’

In fact we have experience of that already…Gordon Brown did exactly that…borrowed large in the hope that growth would come to his rescue….unfortunately events and a financial crisis(much of his making) meant there was no growth…..he was as much playing the ‘Casino’ bank’s game as he was taking huge financial risks that didn’t, and in all likelihood never would, pay off.

So years of massive stimulus and tax cuts have had little effect and indeed there has been neglible growth for a decade, and now they must choose to continue down that road and keep racking up the debt or to raise taxes and make massive cuts but deal with the deficit.

It’s a shame the BBC cannot, or will not, explain the options so lucidly and simply as the CBO does.  Of course if they did Balls and Miliband would have to dream up a ‘Plan C’ as the Public would be on to their scam….and I don’t think they have it in them.

No doubt Stephanie Flanders can guide us onto the right path and enlighten our thinking.

U.S. Government Shut Down Blues – A Dishonest BBC Song

The BBC keeps reporting on the debt and budget talks between the President and the Republicans in the House of Representatives. The latest report covers the announcement by Moody’s that they’re going to review the US credit rating with an eye to downgrade it to a default risk.

My position is that the BBC has an ideological stance when it comes to government borrowing, spending, and debt. Stephanie Flanders has trumpeted the Keynesian solution on a number of occasions (just search her name on this blog and read the links to her pearls of wisdom), thinks the Greek bailout worked (yeah, I know, which one?) and at one point even told us that the US would never default.

With this in mind, let’s look at the BBC’s report on the Moody’s news. As everyone here knows, the problem is that the US is at an impasse regarding the debt ceiling. We either have to raise it, or do some serious cutting in spending right now. There are ideological opponents on each side, but there are also hard facts which are not debatable. The BBC says this about the President’s side of the argument:

He has said he is willing to countenance cuts to social safety-net programmes dear to Democrats, as long as there are tax rises for the rich.

Republicans have rejected the latter proposal, saying that would stifle investment and job growth.

This is false. In fact, it’s more than the class war stuff. As I posted the other day, the President said Himself that He wants to raise taxes on a lot more in 2013, which, you know, is what the whole budget deal is about. Yeah, the BBC censored that bit out of the speech video they showed you. So all you know is that Republicans are holding the country hostage over protecting the evil rich. But since it’s the White House Narrative, that’s what they’re going to report.

Now, about that debt ceiling:

When it came to the crunch in the past, Congress regularly voted to raise the debt ceiling, giving government access to the cash it needed.

How about some context, BBC? The current situation is unprecedented, and Congress never rubber-stamped (that’s implied by the BBC sub-editor’s choice of words) an increase when the country’s finances were in such dire straits. It’s completely dishonest to compare today with the past, and act as if the Republicans are somehow an anomaly and not the situation itself. But they do it anyway.

This year, however, newly empowered Republicans have demanded steep cuts in government spending in return for raising the limit.

“Newly empowered”, eh, BBC? I think we all know what that means: Evil Tea Party Influence. It’s funny, because the BBC and Obamessiah worshiper Mark Mardell initially claimed that the Tea Party hurt the Republicans in the mid-terms. But never mind that. I don’t need to remind anyone here what the Tea Party movement represents to the Beeboids. So back to BBC dishonesty.

Mr Obama has proposed a package of up to $4 trillion in budget deficit reduction over the next 10 years, but Republicans have rejected that and other proposals because it calls for raising taxes.

Again, false. I posted a few days ago about how this White House/BBC Narrative is also false. He’s not giving in on the entitlements at all. But the BBC doesn’t care, they just keep spinning for the leader of a foreign country. Notice also the appearance of “newly empowered Republicans” in a previous BBC propaganda piece report about the budget talks. I’d say this code for “Evil Tea Party Influence” has made its way into the BBC style guide, but it’s probably just the same Beeboid writing it. But still: Narrative? What Narrative, eh?

And then Keynes raises his ugly head again, in the form of Ben Bernanke.

In his testimony to Congress, Mr Bernanke said the Fed would renew stimulus efforts if the economy remained weak.

The Fed’s second quantitative easing programme (QE2) ended two weeks ago, and there has been much speculation about whether a QE3 programme is on the cards.

Now, to someone who is trying to follow reality and is not ideologically locked into policy, this might sound like the captain of the Titanic saying that he’s just going to cut another hole in the hull to help the water flow out the other side. At least the BBC didn’t censor news that people in the real world see it that way:

The dollar extended earlier losses against the euro following Mr Bernanke’s comments, with the euro rising more than a cent to $1.4088.

Now, if, as we heard before from the BBC, printing money and throwing it around increasing borrowing for more stimulus works, why would the dollar tank against a currency that’s the shakiest thing going when the Fed suggests more of it?

Analysts said that Mr Bernanke had only raised the possibility of a further stimulus, and was not saying that it was necessary.

Oh, right, it’s not really his fault, just stupid speculators over-reacting.

Alternatively, it could be because the previous “stimulus” efforts failed and only added another couple trillion dollars to the debt.

Morning Bell: Why Obama’s Stimulus Failed

Oops, my bad. That’s about how the first stimulus failed. Here’s something on QE2:

Obama’s People Admit Stimulus Failed Miserably In Creating Jobs

So we can see how….hang on…what the hell is this?

Democrats Press Obama to Include Stimulus in Debt Deal After Jobs Report

Democrats pressed for some form of economic stimulus in the debt deal President Barack Obama is negotiating with Republicans following a U.S. Labor Department report yesterday showing job growth slowing.

Senator Charles Schumer of New York, the chamber’s third- ranking Democrat, called for an “immediate jolt” to the economy by extending and enlarging a one-year payroll-tax cut that’s set to expire Dec. 31. He asked for action “as quickly as possible by including it in the final debt-limit agreement.”

You have got to be kidding me. No wonder we’re heading towards a Weimar-type situation. So it’s not Republican intransigence to protect the evil rich at all. And the BBC has told you none of this. All you know is the heroic Obamessiah has been trying to save us from ourselves.

Don’t trust the BBC on US issues.


..is the word, is the word, it’s got meaning..”

BBC bigging it up for John Maynard Keynes this morning. Just before 8am I heard Humphyrs ponder “Has John Maynard Keynes saved the world” regarding the G20 farce. The political left may not invest a lot in understanding the essence of how economic works but when they do direct their though process that direction, Guru Keynes is their idol. And so the BBC falls in line and offers us Keynes as the answer even though anyone with half a brain would know that Keynesian economic is utterly discredited. I remember when I was doing my Economic degree back in the late 1970’s – the lecturers all pushed Keynes and damned monetarism. Of course history proved them wrong but in the lofty bastions of the left, such as the BBC, Keynes never went away and his Utopian follies are now presented to us as the global saviour.

Also, in all the G20 coverage, do you notice how it is “the banks” that are presented as having caused the economic crisis? Why does the BBC sanitise the role of government? In the States we had the (Democrat) CRA as a central dynamic leading to disaster. Here in the UK we had McDoom’s ten year spending frenzy and yet, oddly enough, this is not discussed. Why? Is it because the BBC is itself institutionally Statist and cannot conceive that the State itself may be the central problem.