| PS3beats360 said: Widespread corporate corruption has left the world in financial turmoil. It will take a long time to recover from this huge problem. When the increase taxes hit the US and UK: economic austerity programs will cripple struggling economies. More people will be out of work. Unemployment will rise in both the US and UK as a result of economic austerity: welfare cuts, public service cuts, decrease in pensions and increase in taxes. The majority will have to pay for the failings of the wealthy few. |
Lower consumer confidence left the world in financial turmoil in my opinion. Nothing changed physically over the past 3-4 years. Nothing. We have the ABILITY to PRODUCE what we did a few years ago. The GDP we had was not an illusion, we were making a lot of goods and services.
It's just that there's no point in making goods and services, if no one demands it. There can be no trade, if the other person isn't willing to. That doesn't mean the two individuals have nothing to barter for, it's just that they refuse to barter.
Households refuse to buy G S, then firms refuse to provide wages, and invest less, and so the cycle begins.
Keynesianism, or counter-cyclical policy, wants to stop this negative cycle, and start a positive cycle (replace consumer with government). When people feel that the economy is back in shape, then they'll spend again, at WHICH POINT the economy is better.
Unfortunately, the austerity programs are starting even though unemployment isn't back yet, investment isn't back yet, consumer confidence isn't back yet...
