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SW Saskatchewan | Since Eisenhower, Republican administrations have also been wont to drive up the national debt, both in Canada and the US.
So if you expect a sea change in American governance from this election, better not hold your breath.
Financial arena is not where the disaster is brewing - everytime before we could grow ourselves(North Americans) out of our debt as we caught our the next wave of the economic cycle.
Sorry Friends , Romans and Countrymen-we have slammed the door to that possibility tighter than (use your own metaphor here). Until the killing effect of globalization is brought to rein, we will be locked in an equilibrium of less than full employment.
There are three tools that are in the politicians toolbox, but sadly they are more like arrows than a saw or hammer, generally you only get one shot with them.
A govt could always cut taxes to juice up growth, sorry , been there, done that. Clinton's tax cuts were predicated on the "peace dividend" lowering the national debt. Chalk up Iraq, Afghanistan and now maybe Iran and that dividend has become a stock purchased on margin that has fallen through the floor. toss in Bush II and we have hooked ourselves on the Cocaine of the tax refund!
Increase money supply(now known as QE), the big increases of M came from discarding rules and regulations in the financial sector--in my lifetime I have seen "Reserves" in the partial reserve system go from 20 % as low as 1%, now 3% in Canada. With that low a "reserve" against loans, the money supply became, if not infinite, at least as big as the sky-hence the wholesale NINJA loan system and "TOXIC" assets or as it should be known, worthless securitization of loans.
Thus when QE 1 was tried, the slough was already full of "once used water', but its effect was so marginal we got to QE2 and now QE 3- which I expect have as much effect as peeing in the ocean.
The final arrow was what in the old days we called moral "Suasion", ie threatening. When the financial sector was well regulated the Fed(Bank of Canada) could call in JP Morgan and a select bunch of other major banks and lay it on the line--you do this or we will do that!
Somehow, these Banks got to be "to big to fail and then who had who over the barrel? And with Globalization, sometimes the financial sector became a "fifth Column" in our economy, buying,financing, arranging take over of strategic assets in "not so friendly" hands. IE China and Canada's oil sector-the US should be standing up and telling the Chinese that establishing a new colony in the America's is against the Monroe Doctrine-and hopefully get Pretty boy Harper to do the same-even if it takes a poker up his ass to get some backbone.
So there we are, facing a charging Godzilla(2 really) and we only have a water pistol for defence.
Hope I have made some sense but I have grave doubts about survivability.
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Deleveraging? Really?
