This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Austerity Insanity: Opinion

Obviously there are enormous economic costs to widespread stealing, and the only means of preventing theft is through incarcerating the thieves -- and warehousing them in jails/prisons at somewhere between $70,000 to $100,000 per year.

Or we could allot these economic victims a tiny fraction of that amount in welfare and save on the costs of theft, the costs of policing theft, court costs for prosecuting theft and the massive costs of warehousing thieves in prisons.

There are numerous other examples where spending money saves money. Thus it was the simplest of predictions that slashing spending on vital (and cost-effective) social programs could only cripple these European economies even further. Note that mindless austerity doesn't simply add other (hidden) costs, it destroys revenue, too.

The "fat" has long ago been cut out of government spending. Now, every $1 cut from spending destroys $2 in tax revenue. How do you ever "balance a budget" with that dynamic? You can only commit economic suicide as Greece has already done, and which Spain, the U.K., and other traitor governments in Europe are mimicking.

This brings us to a more fundamental defect. The colloquial definition of insanity is to do the same thing over and over and over but expect a different result. This is precisely what is taking place in Europe -- both individually and collectively -- where governments copy the failure of other governments, and then continue those policies when they have already failed in their own economies.

This goes beyond simple insanity. It is nothing less than deliberate economic suicide. Which brings us to the real question: Why are Europe's governments engaged collectively in intentional economic suicide?

The answer to that question is multifaceted, and I have addressed all of those facets in previous commentaries. The real issues here are both political and economic in nature.

In terms of economics we have an obvious dynamic: All Western governments are plummeting toward bankruptcy .

There are only two possible ways to (positively) address this dynamic: Eliminate unproductive government spending and/or increase revenue. What austerity has done is to eliminate productive spending and destroy revenue. Obviously, doing the exact opposite of what is necessary must result in total failure.

2 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
SYM TRADE IT LAST %CHG
AAPL $125.01 0.00%
FB $78.10 0.00%
GOOG $524.22 0.00%
YHOO $41.66 0.00%
TSLA $230.43 0.00%

Markets

DOW 17,841.98 -86.22 -0.48%
S&P 500 2,080.15 -9.31 -0.45%
NASDAQ 4,919.6440 -19.6830 -0.40%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs