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Henry Thornton - Politics: A discussion of economic, social and political issues Global Politics, H1 2012 Date 05/05/2012
Member rating 4/5
US headed for recession,
By Henry Thornton Email / Print

US headed for recession, 5/5.

'AMERICANS have watched austerity sweep Europe with a certain Schadenfreude. But eight months from now they may get a dose of the same medicine. The political compromises that have produced much of America’s deficit of 8% of GDP are programmed to go into reverse at the end of the year, two months after the election. A stimulus package consisting of a payroll-tax cut, investment tax credit and enhanced unemployment insurance expires then, as do George W. Bush’s tax cuts (which have already been extended by two years from their original end-date of 2010). At the same time an automatic, across-the-board cut in domestic and defence spending, called a “sequester”, takes effect, cutting about $100 billion from government spending next year.

'The economic impact of this fiscal cliff is a matter of some debate. The Congressional Budget Office reckons that the combined effects of the sequester and the expiring tax cuts would add up to 3.6% of GDP in fiscal 2013. But David Greenlaw of Morgan Stanley, which puts the total effect at almost $700 billion at an annual rate, argues that the calendar-year impact is much larger, at around 5%. Others think the effect would be smaller, noting that some people will not experience the full tax hit until they file their returns in 2014'.

'Even the lower estimates could easily be enough to tip the economy back into recession....'  Read on here.

Obama vrs Romney - nasty, brutal and oh so long, 20/4.

'AMERICA’S primary elections are not yet formally over', says The Economist, 'but with the exit of Rick Santorum it is at last plain that Mitt Romney will be the Republicans’ nominee. After the bruising primaries, Mr Romney starts from behind. Barack Obama leads in the head-to-head polls. But there are still seven months to election day, and Mr Romney has a fair chance of victory in November. Less than half of America’s voters approve of the way Mr Obama is doing his job. Six out of ten think the country is on the “wrong track”. The recovery is still weak and 12.7m Americans are unemployed. America added only 120,000 jobs in March, below expectations and fewer than in previous months.

'This fight is going to be nastier than the one in 2008. By instinct Mr Romney is a moderate, but the primaries tugged him sharply right, forcing him to boast that he was “severely conservative” by embracing policies, including deep cuts in social spending, that even the famous flip-flopper will now find it difficult to drop. After the primaries, candidates pivot towards the centre. But Mr Romney knows that to turn out a conservative base that does not love him he must mobilise their hatred of Mr Obama. In the meantime Mr Obama appears to believe that he cannot afford to present himself once more as a healer who will soar above party divisions. He is running a more partisan campaign this time round. An already polarised America therefore faces a deeply polarising election'.

  Courtesy Economist

Game on, 16/4.

'Game on', says The Economist, but it's leader writer is mired in pessimism.

'Elections that offer clear choices can be good things. Isn’t that politics as usual? But American voters are in danger of being forced to choose in November between a Republican Party that is allergic to needed tax rises and a Democratic Party that lacks the courage to make the spending cuts required for America to live within its means. The prospect is for a shouting match that pushes the parties ever further apart and threatens to make the whole system of government seize up'.

China's corruption scandal, 15/3.

'Controversial Chongqing party chief Bo Xilai has been removed from his post, bringing China’s sensational political scandal to a head and leaving his once sky-high political ambitions hanging by a thread.

'A short statement released by the state-run Xinhua news agency said Zhang Dejiang will take over as Chongqing party chief while serving concurrently as vice-premier. There were no further details, and the statement did not say if Mr Bo had been assigned another role, or if he was under investigation.

'Mr Bo, the charismatic figurehead of China’s broad “red” revival movement, has become the most senior victim of overt power struggle since Chen Liangyu six years ago. The former Shanghai party chief was toppled in 2006 and later sentenced to 18 years in jail for corruption'.

I'm not bluffing, says President Obama, 3/3.

'WASHINGTON — President Obama, speaking days before a crucial meeting with Prime Minister Benjamin Netanyahu of Israel, stiffened his pledge to prevent Iran from acquiring nuclear weapons, even as he warned Israel of the negative consequences of a pre-emptive military strike on Iran’s nuclear facilities.

'Seeking to reassure a close American ally that contends it has reached a moment of reckoning with Iran, Mr. Obama rejected suggestions that the United States was willing to try to contain a nuclear-armed Iran. He declared explicitly that his administration would use force — a “military component,” as he put it — only as a last resort to prevent Tehran from acquiring a bomb'.

US Presidential election, 29/2.

Ric Santorum has challenged frontrunner Mitt Romney strongly enough to keep him in the game and Romney under pressure.

Soon 'Super Tuesday' may resolve the issue though with an improving economy, vast inequality (and low taxes paid by the super rich Americans) to fulminate about and a sword to rattle in the direction of Iran, we'd be surprised if either Republican beat the champion of the battlers.

US presidental election, 6/2.

Mitt Romney has solidified his position for the Republican nomination but lost ground in the main event, with improved economic indicators and questions about Romney’s wealth and taxes lifting Barack Obama to a head-to-head advantage for the first time this cycle.

See the latest ABC News/Washington Post poll here.

Israel to strike Iran?, 4/2.

'THE US Defence Secretary believes Israel is poised to attack Iran in the first half of this year to stop Tehran's nuclear program, according to undisputed reports yesterday.

'The prospect of war in the Middle East emerged after Washington Post columnist David Ignatius reported that Defence Secretary Leon Panetta saw "a strong likelihood" that Israel would strike Iran as early as April. Ignatius appears to have written the report after a background briefing in Brussels with Mr Panetta.

'Mr Panetta was asked yesterday to confirm whether this was his view, and he said he was not disputing it, but then added: "What I think and what I view, I consider that to be an area that belongs to me and nobody else."

'The growing likelihood of an Israeli attack on Iran's nuclear facilities was echoed by a range of Israeli officials, including Defence Minister Ehud Barak.

"If sanctions don't achieve the desired goal of stopping (Iran's) military nuclear program there will be a need to consider taking action," Mr Barak said. "A nuclear Iran will be more complicated to deal with, more dangerous and more costly in blood than if it were stopped today".'

Who will challenge Obama?, 1/2.

Neither Mitt Romney’s nor Newt Gingrich’s private sector experience is playing particularly well with the American public, although Gingrich’s consulting work draws far more criticism than Romney’s background buying and restructuring companies.
See the latest ABC News/Washington Post poll here.

'Forget about economic recovery. Obama is toast', 25/1.

David Goldman ('Spengler') says: 'President Obama thinks that the improving economy will win him a second term, the New York Times reports today. Whatever he’s drinking, order me a double. His poll numbers look a little better because the Republicans have spent the past several months in a fratricidal bloodbath. Fortunately, the memory of the American electorate for such antics is short. Once we choose a candidate (and I am happy with Romney, Santorum, or Gingrich) and unite behind him, we will win, unless, of course, we find a way to sabotage ourselves.

'People are hurting, and badly. The official unemployment rate may have fallen, slightly, but the real unemployment rate — the number of working-age Americans who aren’t working — rose from about 12% before the 2008 crisis, to about 23%, and hasn’t come down. That includes people who have retired early because they can’t find work, spouses who used to earn a second income but have gone back to homemaking because work isn’t available, self-employed people whose businesses have collapsed, young people who live in their parents’ basement because they can’t afford tuition and can’t find work. The chart below, courtesy of the Shadow Government Statistics website, shows (in the blue line labelled “SGS alternative”) the way unemployment feels to Americans: one in four Americans who could be working, isn’t. That’s roughly twice the pre-recession level'.

Courtesy Shadow govt data website

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