E.U. Debt Crisis Dominates World Markets

By John L. Caiazzo, Futures Magazine, 9/19/2011

The European debt crisis continues to be the dominant factor in global financial markets. The ongoing attempt by Germany, France and others to find a way to keep Greece from defaulting on its debt seems to me to be an exercise in futility. If Greece is unable to service its current debt, how can an extended loan and additional debt be supported? We are in favor of allowing whatever will be to be, and if it involves default, so be it.

Other countries are also problematic such as Spain and Italy. I cannot conceive of the countries who are experiencing financial difficulties due to the global recession coming to the aid of the weaker members of the E.U. just to save a currency that never made sense. Since the 17 countries in the euro all have different economies, I could not understand the one currency fits all concept anyway. My suggestion would be to let the chips fall where they may and not incur the wrath of the public in unwarranted spending during this time of crisis.

The latest report from Poland indicated that tens of thousands of trade union activists from around Europe marched to protest low wages and layoffs. They have no clue nor concern for their country in my opinion and do not realize nor care of the fragility of their economy. I think they should realize they are lucky to have jobs and take advice from President John F. Kennedy who said, "Ask not what your country can do for you, ask what you can do for your country."

In the U.S., a proposed "Buffett" tax calling for a tax rate hike for millionaires will actually only affect 0.3% of the American taxpayers and to me is a joke. The U.S. administration is playing on the concerns of the middle class where millionaires have supposedly been coddled to. Warren Buffett, obviously a friend to the President, proposed charging higher rates to millionaires which will have absolutely no effect, in my opinion, on the U.S. budget deficit since it only affect a small sector. The entire proposal is more of a psychological play on the feelings of the unemployed and middle-to-lower income families.

We continue to believe any tax increases to offset the rampant spending is not the answer. The answer is to cut spending and to create a tax program that benefits the businesses that hire people so that they know what their costs would be. The other situation I mentioned recently would be to impose duties on imports and entice corporations through competitive tax rates to return to the U.S. from the countries that provide such tax incentives. U.S. jobs were lost and the idea of creating a job from nothing makes no sense to me. We need to get those jobs back. We also point out that the government cannot create jobs. Only business can create jobs and the reluctance, under the confusing administration proposals does not provide confidence necessary for businesses to expand and hire.

http://www.futuresmag.com/News/2011/9/Pages/EU-debt-crisis-continues-to-dominate-world-markets.aspx