Keller @ Large: U.S., European Economies In The Same Boat

BOSTON (CBS) – Thursday was yet another day of stock market free-fall, driven, the experts say, by grimly familiar bad news: consumer prices, up; unemployment, up; home sales, down sharply. And another major factor — an economic and political meltdown in Europe.

That makes our problems seem like a day at the beach by comparison.

Professor Jay Sultan of Bentley University is an expert on international finance. He says if you think crowd scenes like the endless lines at job fairs are a sign of tough times, consider the chaos in Greece, Italy, and other Euro-zone nations plagued by astronomical unemployment and debt.

WBZ-TV’s Jon Keller Is At Large

We’ve struggled to find political compromise in this country, but when you hear talk of a global recession, it’s triggered in large part by the epic European failure to find solutions.

Perhaps a vacation-refreshed President and Congress will return after Labor Day and find compromise.

But unless the Europeans can do the same, look for Wall Street’s stomach-turning roller-coaster ride to continue.

More from Jon Keller
  • Willow

    I think that robbing Peter to pay Paul has finally caught up with the world. Now what?

  • Ajay

    Since it looks like we can’t rob Peter any longer, the only solution is to try and reduce the amount that you have to pay Paul.
    Some on this board seem to follow the solialist approach and want to continue to redistribute the wealth. So basically, they’re checking out Peter and looking for more pockets to take from.
    At some point, we have to accept the idea that we can’t support everyone on Peter’s income. In 2010, less than 50% of the population paid federal income taxes. Peter has become the minority and is still expected to carry everyone.

  • FireGuyFrank

    And the name of the boat is Titanic.

    We need to understand that creating a nanny state never, ever works. That is why socialism and communism fail. They are weighed down by debt and the loss of drive to perform at higher levels.

  • Ajay

    It seems that our senior politicin (I can’t use the word leader here) wants that nanny state. National health care is the perfect example and its going to be our biggest expense.
    We shouldn’t focus too much on the economic problems of other economies. If we can get ours in shape, perhaps their’s will fall inline as well But until we can rid ourselves of the Peter robbers, we’re going to continue downhill. I wonder what all of the Pauls are going to do when Peter is broke?

    • Willow

      Ajay, I thought Peter was broke, and has been for a long time. Thus, our trillions of dollars in debt. We absolutely have to stop spending and get our checkbook balanced. I had no idea that 50% of the country paid no taxes. How does that happen?

      • Ajay

        The wealthy that avoid paying taxes must be taking advantage of those pesty loopholes. Unlike the lower income groups that are actually getting back more than they pay in. Perhaps we should close those loopholes for everyone? But you’re only in favor of changing the exemption laws on the rich, aren’t you? Since you take advantage of the loopholes available to you, we can’t touch them. Some compromise.
        I am glad to see that you approve of Ronald Reagen’s trickle down approch. Cutting taxes is another way to give people and businesses the means to spend more, therefore the money will be invested and paid back tenfold (again, not an accurate number) and the economy will recover.

      • tsal

        Ajay, perhaps you should look up the meaning of the term loophole. A deduction is not a loophole and there is not one company in this country that does not use things such as payroll deductions or business expenses. A loophole as I pointed out earlier is when a corporation has business in the U.S. and in another country and claims to both countries that it is paying taxes elsewhere. One example of many.

        If you can have a conversation without taking potshots, it would probably go a long way – particularly since you have no idea what I do, what my business is or how it is run. Just asking for civility and hoping that it can pervail.

      • tsal

        It happens because a good portion of these are people without jobs or who have taken a job that pays far less than they were previously making. Many are in homes with an upside down mortgage. It’s hard to pay taxes if you don’t have money to begin with and you need food on your table and for your family. You can’t cut from people who have nothing. You can however put them back to work where they earn the money to pay taxes. If you take the percentage of those who don’t have an income high enough to pay taxes and put them to work, the money invested will be paid back tenfold (not an accurate number) and the economy will start to recover. They will spend. Businesses can then begin producing with a confidence that what they produce will sell.

        If we cut spending for job creation and if we take more from those who have nothing, it will put people further into debt that are already in debt and create debt for thousands who have managed to stay afloat.

        Do remember that a portion of those who didn’t pay taxes are the wealthy.

      • Ajay

        And I don’t recall being uncivil or taking potshots. Discussion is great, but so far you seem to lean more towards repeating Obama’s sound bites than being able to support any position.
        I don’t know what you do or anything about your business. I only can read what you post and so far I’m puzzled. It makes little sense and your only support is to tell a reader that they misread or you redefine something like “loophole” to meet your need.

      • Ajay

        I guess that we’re not clear on the term loophole. By your definition, loopholes are illegal; in other words, tax fraud. If that’s the case, why isn’t Obama pressuring the IRS and DOJ to track down the violators and collect the taxes due? And if its just a matter of enforcing the law, why does congress need to be involved?
        Loopholes are ligitimate deductions and expenses used by corporations. They may not be used in the manner that the lawmakers intended and you may loath them for ‘getting away” with them, but they’re legal none the less. So your arguement is a matter of reforming the tax code rather than simply enforcing it. That call for congressional involvement.
        I am all in favor of reviewing the tax code and trying to close the various loopholes. But unlike you, I want to look at all of the deductions and sxemptions, not just those that apply to the few that you seem to have a problem with.
        You example of a corp claiming to pay taxes in two different locations is a poor one. If a corp did take that deduction, the IRS would require proof. Again, we’re back to tax fraud and an enforcement issue, not a loophole.

  • tsal

    Europe is doing the very same thing the United States is doing – catering to the wealthy. The wealthy do not create jobs. At the moment Corporate America is as financially strong as it has ever been. Is it creating jobs? Nope. It’s sitting on it. It’s cutting back its payroll, its repaying and refinancing its loans, its cutting capital spending and its doing all it can to hold onto its profit margins. This is the group some are counting on to create jobs? Corporate America has been historically strong for years. If they planned to create the jobs – where are they?

    I will continue to say it and so far it has proven true. Until we create government jobs that will employ many, we will continue to go in and out of recession. It’s exactly the way we got out of every other depression/recession. Cutting spending to create jobs is exactly the opposite of what we should be doing. Europe has been cutting public spending. It clearly isn’t working. Where it goes we will follow so hold on tight because with the mindset as is currently stands it will not be pretty.

    • Ajay

      Massive government employment and regulation has been proven to be effective in avoiding the ups and downs of recessions. The history and destruction of the USSR’s economy is a good example. The Peters of an economy begin to disappear as the Pauls dmand more and more.
      If over half of the population is not paying into the system, how can anyone expect the system to hire even more people? The socialistic model just doesn’t work.

      • tsal

        Ajay before I start I want to be clear that I understand your opinion is every bit as valid as mine. They are opinions and neither is right and neither is wrong. My guess is that the solution will lie somewhere in the middle.

        Keynesian economics are exactly the economic model used to get us out of the Depression, World War II, and the economic expansion following the war. The initial theory during the depression was for the government to do nothing. And it didn’t. And the depression did not improve. Along came Marriner Eccles with Keynesian economic. Remembering that the debt was staggering then also, he proposed creating the government jobs, investing in infrastructure, national parks. People who had not been paying taxes then either got back to work. They had an income and could begin once more to contribute to the economy by buying and also by paying taxes.

        The model has worked repeatedly and I see no reason why it would not work now. What I do see is a corporate American wealthy beyond belief that is not investing in jobs so that clearly won’t work. Like we did during the depression, it seems to me we are waiting for the private sector to kick in and nothing is improving. Why not try something else?

        It’s an opinion – I have no idea if it will work. I only know it has worked in the past. Society is different now so whatever we do will not be a blueprint of the past but more of a mixture as I said.

  • Willow

    i agree that we have to put people back to work to buy and pay taxes. I also think that it’s important to cut spending as well. There is too much waste and entitlements. It will take a combination of efforts to even begin to see our country rebound from the mess we’re in.

    • tsal

      Willow you are right – waste has to be cut – and the tax credits have to be ended. Efficiencies also have to be put in place. A lot to do. I think it has to be a combination of investment and cuts with investment being in the form of job creation.

  • beaches

    Undo NAFTA and everyones economy will get back to normal. We can’t have a global economy, can’t anybody see what has happened to all the jobs, they’re in China! The rich are richer because of NAFTA, and to top it all they get tax breaks, yeah that’s fair!

  • Ron

    How about we cut some corporate welfare and some foreign aid, respect cannot be bought, and to create some jobs we give a tax break to corporations that create jobs in the USA and increase taxes on those corporations that export jobs. Not a complete solution but it might help.

    • Ajay

      I’m all in favor of ending the corporate welfare. But I love the idea of ending a lot of our foreign aid. You’re correct in saying that we can’t buy respect. Its time that we put our dwindling resources towards our own needs first.
      Tax breaks for those that create jobs in the US has its problems. Corporation will only create jobs to receive the tax break. As soon as the tax break is gone, so will the jobs.
      Perhaps we need to start thinking of products in the sense of percentage made with US labor. Cars are listed with what percentage is made with US parts. To be considered ‘made in the USA’ (and eligible for tax breaks or to avoid additional tariffs) you not only need to be made with at least 75% US parts, but 75% US labor as well. The labor ratios of corporations should also include their support, administrative, R&D, and contractors. IBM shouldn’t be able to call itself a US company if it has 75% of its factory force in the US, but 100% of its customer service in India and 90% of its R&D in Japan.

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