IMF

The answer to that question is simple, the US of course. Some months ago I made a comment to Skip that the EU would be lucky to survive another ten years. It now looks like my estimate could have been generous. Greece is all but bankrupt, Portugal and Spain are teetering on the brink, Italy and Ireland are close behind. This week, Britain announced that it forecasts a budget deficit larger than that of Greece. All is not well in the New European Empire.

A Greek Police Officer Hit By A Molotov Cocktail.

In a one-size-fits-all economic arrangement there are bound to be casualties. The cap simply won’t, and can’t, fit some countries. Imagine the US joining an extended form of NAFTA, perhaps called AFTA, which includes all or most countries in Central and South America. To create a common currency with equal value in all member states would be disastrous, not to mention the fact that ‘free movement’ rules would have to be observed. So much for immigration controls!

These free movement rules are very much a one-way street. For example, compare the number of Polish and Latvian emigres in Britain with the number of Brits in former Eastern Bloc countries. During a recession it’s virtually impossible to provide jobs for the unemployed in your own country, without trying to cater for the requirements of ex-pats from another twenty six member states.

There is no doubt that the empire builders in Brussels have this vision of being the prime world superpower, economically at least. There are numerous reasons why this just won’t work. Many European nations are notoriously socialist in their outlook, indeed for some of them communism was the only system they knew until recent times. Socialism and free market principles together cannot work. That is why the current US administration can never work. Any system which is top-heavy with bureaucracy and regulation is doomed to failure. More time, money and resources are used in supervising the machine than in letting it do its stuff.

I hope that what is happening in Europe will be an example to Obama and Congress of how not to run an economy, although it will probably fall on deaf ears. It is a coincidence that Obama’s administration gave the International Monetary Fund another $100 billion recently, while this week it was announced that the IMF is to give $39 billion to Greece. So much for the European economic powerhouse, on top of the $106 billion they are giving from countries in the Euro-zone they have to run to the IMF for a top-up, some of it being American money.

A failed economic system can only shored up for so long, eventually the weight of flawed financial principles, bureaucracy and Euro-socialist ideals will bring the walls crashing down. Then, I wonder, who will they call?

(Editor Dee is in for Skip today)

We now have a pattern on our hands. When the math behind Barack Obama's health care plans doesn't work, Obama attacks math. Now, he doesn't do it directly. He gets Peter Orzsag to debase his intellect for Obama's political ends. First, he did it with the IMF score. Then this week he pressured the CBO scorers early this week after their math provided defeat after defeat to his healthcare dreams. And then this weekend, Orzsag has attacked Doug Elmendorf, the CBO director.

Case 1: The IMF. At a G-20 meeting earlier this year, Barack Obama came away empty-handed. The only success was to send money to the IMF. $100b. This wasn't going to pass on its own, so they attached it to the Supplemental that paid for our troops. And claimed that $100b leaving the treasury costs nothing. According to the Politico, Orzsag had a totally unprecedented meeting with the OMB scorers putting political pressure on them to cook the books. Only a little comment at the time. Oh ... and no one bought Orzsag's nonsense, and the amount became a focus of attention as a bailout of European banks.

Case 2: CBO Whitehouse meeting. Earlier this week, the President meant with the Director of the CBO. According to Jake Tapper, there was a lot of pushback against the unprecedented nature of the meeting:

Said Senate Minority Leader Mitch McConnell, R-Kentucky: "I noticed that the CBO director was sort of called down to the White House yesterday. It strikes me as somewhat akin as the owner of the team asking the umpires to come up to the owner's box."

McConnell said that "if the CBO is to have credibility, they're the umpire. They're not players in this game."

CBO is tasked with providing “objective, nonpartisan, and timely analyses to aid in economic and budgetary decisions on the wide array of programs covered by the federal budget.”

Case 3: Keith Hennessey puts it nicely, "CBO Kills the President's Medicare Comission Proposal". You see, the CBO found that Obama's great plan to limit costs was to create a commission only saved $2b. One half of one percent of the total cost. So what happens? Orzsag goes after Elmendorff in all but name:

A final note is worth underscoring. As a former CBO director, I can attest that CBO is sometimes accused of a bias toward exaggerating costs and underestimating savings. Unfortunately, parts of today’s analysis from CBO could feed that perception. For example, and without specifying precisely how the various modifications would work, CBO somehow concluded that the council could "eventually achieve annual savings equal to several percent of Medicare spending...[which] would amount to tens of billions of dollars per year after 2019." Such savings are welcome (and rare!), but it is also the case that (for good reason) CBO has restricted itself to qualitative, not quantitative, analyses of long-term effects from legislative proposals.  In providing a quantitative estimate of long-term effects without any analytical basis for doing so, CBO seems to have overstepped.

What is going on is crystal clear. The CBO is not caving to extended political pressure. After weeks of Pelosi "scolding" and Baucus aides "expressing frustration" it has come to open attacks on the CBO, its director, and the institution's integrity.

Well. I have to say, finally Barack Obama is bringing change I can believe in. Chicago-style change.