[chilefuturo] economia no es viable

From: Carlos Contreras <clubcientifico@xxxxxxxxx>
To: chilefuturo@xxxxxxxxxxxxx
Date: Sat, 20 Feb 2010 19:57:05 -0300
Antiguo adagio: se puede gastar mas que lo que se gana solo por un tiempo.
¿que se puede esperar en EEUU?

"

The amount of pain that Spain must endure to get it fiscal house in order
should not be underestimated. Wages are going to have to fall relative to
northern Europe for them to be competitive. The dependence on government is
going to have to be reduced. This is not going to be easy for a socialist
government with a very thin coalition.

And that brings us back to Greece. While Greece can be readily bailed out
(assuming they accept large budget cuts) because it is small, Spain is too
big to save. The European Union cannot set the precedent that countries that
do not set their fiscal houses in order will be bailed out by countries that
do.

This is the nature of the End Game I have been writing about. The decisions
are now political. How do we unwind the debts and the leverage? How much
pain do we postpone and how much do we take on today? It is the same
question for much of Europe, Great Britain (serious problems there), Japan
(which is a bug in search of a windshield), and the US. We now have a
limited number of path-dependent options. By that I mean the political paths
chosen by the various governments will dictate the economic path we go down.
How Much Is Too Much?

And to close, I want to show a chart from today's *Wall Street
Journal,*from a column by Daniel Henninger.

[image: image002]

This is the definition of an unsustainable path. Spending has grown 7 times
as much in real (inflation-adjusted) terms as median household income over
the last 40 years. Like Greece and Spain and much of the rest of the
developed world, we will be forced to make hard choices. We cannot afford to
do everything that even conservatives would like, let alone liberals. We
cannot fight two wars, increase spending on health care, stimulate a
faltering economy, and fun a 20% explosion in federal employees in just one
year, etc., etc.

Pay attention to Greece and Spain and especially Japan over the next few
years. Unless the US gets its fiscal house in order, we will be next. It
will not be any easier for us in five years than it is for Greece today.
"
saludos

-- 
Carlos Contreras, presidente
Club Científico de Peñalolén, Santiago, CHILE
http://www.clubcientifico.cl
fono/fax. 562-7691307    09-2114827
[chilefuturo] economia no es viable

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