U.S. vs. Europe: Who is the Bigger Basket Case?

     We certainly should be and under George W. Bush we would win hands down. We were the biggest basket case with the worst chief executive anywhere in the First World. However times have changed and few places have changed for the better; the only exception to this may be Germany, Finland, and the Netherlands. Germany, the most healthyl Western capitalist country right now has a lower unemployment than in 2005

    Yet they are also the problem: these healthy countries are standing in the way of a proper bail out of Greece and the rest of the periphery countries, treating the Euro crisis as a morality tale out of Aesop's: You should have been good worker ants like we were and now you don't get any honey. The facileness of this mindset is underscored by the fact that Spain and Ireland had budget surpluses in 2007 before the crisis struck, that is to say, they were worker ants for all the good it did them.

    We in the U.S. meanwhile can't even raise the necessary funding for the government for the next month, that August debt agreement notwithstanding. At present FEMA could lose the necessary funding for disaster relief by tomorrow and the government is slated to be partially shutdown by the weekend. Still the GOP House blunders about trying to use disaster relief as an occasion to cut spending for alternative energy.

   Say what you will about the S&P downgrade but in this vein their reasoning was at least right: how can you have any confidence where the U.S government is concerned? S&P had sited an inability of Congress to get anything and pessimism about the Bush tax cuts expiring. Again S&P's premise was sound.

    Europe however is the number 1 headache right now, and considering that our legislative process is currently a vaudeville joke, they have really earned this.

    The Germans and the Finns keep dawdling around preaching austerity and lecturing about fiscal discipline while the cow is leaving the barn. The U.S., IMF, and the rest of the world are imploring Europe to do something more than the half  hearted measures they've employed until now. In theory the Euro countries agree but admit that they worry about the political costs at home.

   President Obama has been on the phone with Angela Merkel daily imploring bold, meaningful action, and Merkel does to a large extent get it. But at home the public is against any help for Greece, et al, and even her own party is deserting her on this. Essentially the European response to the urging of the U.S. and other nations and central banks is that they know action is needed but they need another 6 weeks. That they don't have it seems not to change Europe's plans.

   On the other hand, there are some who had hope that China would bail out Europe. Sure, Europe wont bail out Europe but China will bail out Europe. The Chinese this weekend poured cold water on this scenario. They will buy Euro bonds only if it falls within their appetite for risk. They will not heat up their economy to save Europe and the global economy. "We are not saviors!" China declared.

   China says it will continue to grow at 8-10%  a year but that it will not inflate itself to 16% GDP or anything like that-or even the 12% they achieved back in 2008. China is more concerned about inflation than growth at present.

    So the U.S. has a dysfunctional legislative process, Europe refuses to bail itself out but hopes China will, and the Chinese could help some by growing by more but chooses not to. Like the old saying goes: There are those who are willing to help you but they can't. There are those who can help you but they wont.