We have been cursed by the famous Chinese curse: "may you live in interesting times." I will travel this summer to Spain to deliver a paper at the International Political Science Association's annual conference. After arranging for flights and hotels, I just have to worry about one thing: will Spain still be in business when I get there?
Fears about Spain's debt problems roiled world markets Wednesday. Stocks fell in Europe and Asia, the euro slipped to a fresh two-year low against the dollar and Spain's borrowing costs surged. Two weak debt auctions in Italy also pushed that country's borrowing costs higher, with the 10-year yield touching 6% for the first time since Jan. 30.
Spain is at the point of collapse, due chiefly to a real estate bubble that looks rather familiar. I want to see a bull fight. Are the bulls going to be butchered for meat before I get there?
I also have to wonder whether the United States will be here when I get back.
The benchmark U.S. Treasury yield fell to its lowest level in at least 60 years on Wednesday as worries of contagion from Spain's ailing banks raised bids for low-risk investments.
Apparently a two bedroom house in the Catalonian village of Rasquera is going to take down the American treasury because the residents couldn't come up with the 75% of the vote necessary to legalize growing marijuana.
What about growing marijuana to pay off crushing municipal debt? One Spanish village put the idea to the vote Tuesday, and a majority of its citizens approved — but not the 75 percent needed.
So the U.S. Treasury goes up in smoke. How do the Matadors feel about growing marijuana?
Meanwhile the jobs picture in these United States looks rather gruesome.
The proportion of Americans in their prime working years who have jobs is smaller than it has been at any time in the 23 years before the recession, according to federal statistics, reflecting the profound and lasting effects that the downturn has had on the nation's economic prospects.
By this measure, the jobs situation has improved little in recent years. The percentage of workers between the ages of 25 and 54 who have jobs now stands at 75.7 percent, just a percentage point over what it was at the downturn's worst, according to federal statistics. Before the recession the proportion hovered at 80 percent.
We are in the midst of a global depression. It doesn't feel as bad as the last one, because the world is a lot wealthier than it was last time. The stakes are the same. The regimes will either correct the problem or they will be replaced. Cue ominous music.
A reasonable person can argue that this is not the time to cut spending as that will immediately depress economic growth. Such a person would have to explain how current spending levels can be sustained, even in the short run. If you are going to borrow to cover spending, you have to borrow from someone. Who is left to lend, if there is no confidence in the US Treasury? China?
I am simple minded. I think that the proper response to a problem is to figure out what caused it and correct the cause. Governments across the globe have over promised and over-spent. That is the cause. The solution is to bring our many international houses in order. You could argue that imposing sensible discipline on government budgets all at once would be incredibly painful. It might be possible to pay the pain out gradually. The pain is unavoidable. The main thing is to make policy that will move toward solvency.
We can be sure that the Obama Administration is not in that business.
President Barack Obama said Tuesday that only Congress can take the "bold action'' needed to spur job creation, as he unfurled an election year "to do'' list for lawmakers.
Obama's action plan for Congress centers on a series of economic initiatives he has already been pushing for months, including eliminating tax incentives for companies that ship jobs overseas and promoting new tax credits for small businesses and for companies to develop clean energy.
None of the items on the president's wish list has previously gained any traction in Congress, and there was little indication that they would in the six months between now and Election Day.
Our President is not even pretending to address the country's economic and fiscal problems. He is solely concentrated on winning reelection. If he does win that, what will he do over the next four years? All we can go on is the past. He will ignore the future.
I will try to blog from Europe. I will let you know if I make it to Rasquera and if, like, they changed their minds, and man… What was the question? Maybe I'll just join the Choom gang.