United States government averts shutdown

Faced with a huge 1.5 trillion dollar deficit  American politicians have been trying to come up with budget cuts  and  avert a government shut down. After much huffing and puffing they agreed to a $38 billion cut. Theres's much discussion in the blogosphere on the worth of these reductions.  In my view theres only one real important question to ask_ Will the cuts return the budget to surplus in a reasonable period, say five years? If the answer is no , then its a failure.  Certainly  Peter Schiff is not very happy. Might be a good time to buy precious metals.

Safer to lend to Buffett than Barack Obama

The United States, a nation already suffering from huge budgetary deficits has just passed a Health Care bill that will cost them billions. The result- Warren Buffett is a safer investment then Obama's government:

March 22 (Bloomberg) -- The bond market is saying that it’s safer to lend to Warren Buffett than Barack Obama.
Two-year notes sold by the billionaire’s Berkshire Hathaway Inc. in February yield 3.5 basis points less than Treasuries of similar maturity, according to data compiled by Bloomberg. Procter & Gamble Co., Johnson & Johnson and Lowe’s Cos. debt also traded at lower yields in recent weeks, a situation former Lehman Brothers Holdings Inc. chief fixed-income strategist Jack Malvey calls an “exceedingly rare” event in the history of the bond market.

Global Financial Crisis? That was just the warm up act to the coming Global Financial Catastrophe. 

Also this has been around for some time but I only saw it today:

Daniel Hannan in the USA

British Conservative MEP Daniel Hannan become known to the blogosphere a few months ago when he criticized PM Gordon Brown. Below is a speech he gave in Denver Colorado. He compares the American and European ideas of democracy. Well worth watching. I wish we had politicians here who were strong supporters of direct democracy.

Drop Dead California

Thats what Peter Schiff thinks Obama should tell California:

During the height of New York City’s financial crisis in the 1970’s, President Gerald Ford had the good sense to turn down Mayor Abe Beame’s request for a federal bailout. The refusal prompted the famous New York Post headline, “Ford to City: Drop Dead.” More than 30 years later, as California Governor Arnold Schwarzenegger makes a similar plea to Washington, I hope President Obama will show similar restraint. Unfortunately, given Obama’s recent string of unwise economic decisions, it’s hard to imagine that his judgment will suddenly improve.

A federal bailout would spare California from having to make spending cuts needed to bring its budget into balance. The matter has become urgent since California voters rejected several tax-hiking ballot initiatives. Rather than taking the vote as a signal to dramatically curtail spending, the state turned to the feds. If they get a free pass, the politicians can avoid fixing any of their past mistakes or preparing California for the future...

Its worth reading in full, if for nothing else an excellent example of clear economic writing. Its relevant to Australia too. The government gave the banks a 100% government guarantee on their deposits so State governments are finding it harder to raise capital , forcing them to either raise interest rates on their bonds or ask the Feds for a bigger handout.

The USA really is in decline

At least parts of it are. They are thinking of bulldozing entire city districts. :

Dozens of US cities may have entire neighbourhoods bulldozed as part of drastic "shrink to survive" proposals being considered by the Obama administration to tackle economic decline.

The government looking at expanding a pioneering scheme in Flint, one of the poorest US cities, which involves razing entire districts and returning the land to nature.

Local politicians believe the city must contract by as much as 40 per cent, concentrating the dwindling population and local services into a more viable area.

The radical experiment is the brainchild of Dan Kildee, treasurer of Genesee County, which includes Flint.

Having outlined his strategy to Barack Obama during the election campaign, Mr Kildee has now been approached by the US government and a group of charities who want him to apply what he has learnt to the rest of the country.

"Shrink to Survive". Hmmmm... Perhaps California could try that.