What Swan said.

[Gob]

Federal Treasurer Wayne Swan has delivered a speech labelling some elements of the United States Republican party as "cranks and crazies".

Mr Swan's speech at the Financial Services Council breakfast in Sydney comes less than two months before the US election.

His speech referred to political gridlock over spending cuts and tax increases due to kick in early next year, which could tip the US economy back into recession.

"Let's be blunt, the biggest threat to the world's biggest economy are the cranks and crazies that have taken over the Republicans," he said.

"Despite (US president Barack) Obama's goodwill ... the national interest was held hostage by the rise of the extreme right Tea-Party wing of the Republicans.

"There can be few things more alarming in public policy than a political group which was genuinely prepared to see the government of the United States default on its obligations in order to score a political point."

Seconded!!

[Gob]

TRADE Minister Craig Emerson has backed Wayne Swan's controversial attack on the "cranks and crazies" within the Republican Party, saying the Treasurer's assessment on the United States' hard right fringe is "absolutely" right.


Speaking on Sky News Australian Agenda this morning, Dr Emerson endorsed Mr Swan's comments that the Republican Tea Party faction poses a threat to global economic stability.

"Absolutely, I agree," he said. "The reason that Wayne said that is there is this real issue of a fiscal cliff - that is, that taxes are set to go up and spending is set to go down, which could have a contractionary effect of around 5 per cent of GDP - that is a recession in any one's terms," he said.

"To have an economic recession in the United States, a potential contraction of five per cent of GDP, do I think that it crazy? Yes I do," he said.

Dr Emerson warned if Washington remained in a gridlock over its economic negotiations, it would have a "very damaging effect" on the global economy which could ripple through to Australia.

[The Hen]

I can't stand ripples.

[oldr_n_wsr]

Ripples are inevitable. Especially when the rock is really big.

While I understand your concern, I don't believe it is better that the USA borrow 0.40 of every dollar it takes in. That being already 16 TRILLION in debt and that amount going higher every day is good for the world.
I know it's not good for me and my kids (and possible grandkids). I don't know the solution on a country wide, let alone a global wide scale, but if the USA goes bankrupt, I think the ramifications of that are even more severe than trying to curb spending now.

I am not a republican, democrat nor tea party (although I do like unsweetened iced tea)
As far as taxes go, I take home X dollars after taxes, any more they take from me is now a tax increase. I don't deal with "sundowning" of tax "cuts" made in the past. To me they were tax reductions and anything that raises my taxes now is a tax increase. I know in my area they have been holding the line on county/state/town taxes but have been increasing "user" fees for beaches and parks and such. To me those are just disguised tax increases. But it allows the powers that be to say they have held the line on taxes. Bull shit.

ETA
At home I am fiscally conservative. I spend less than I take in. That allows me (or will allow me) to buy the emegency purchase or maybe even to retire eventually. My government at all levels should be that way. I want them to be that way and many of us are starting to demand they be that way. If that me part of the "crazed" then so be it.

[Sue U]

While that is a sound and admirable way to run your household economy, oldr, it is not the way governments have to or even should work. Government pays for really big projects and programs that benefit the nation as a whole, often on an ongoing basis, and which can be financed over much longer periods; this means your kids and grandkids will be benefitting from them, too, as well as helping to pay for them; they don't have to be "gifts" to the next generations. (If your kids inherit your house, wouldn't they still have to pay for upkeep?) Moreover, the government doesn't have to worry about socking away enough money in high-earning years to provide for a comfortable retirement. And the goverment doesn't have to worry about cessation of revenue or meeting its obligations on account of its illness or death; it's a pretty good bet that the USA will be a going concern for a while to come.

I worked for a while in bond trading and learned a simple rule that can be applied to the nation's debt, which may help to avoid so much hand-wringing: "If I can't pay on a hundred thousand dollar loan, I have a probem; if I can't pay on a hundred billion dollar loan, the bank has a problem." Scale as necessary.