The Italian government revisited its plans for handling the nation’s gaping public debt problem. On Friday, Prime Minister Silvio Berlusconi said that tax increases and spending cuts would both be in the new austerity plan.  The tax increases included a “special levy” on income above €90,000 per year as well as tax increases on income from financial investments.  More specifically, there would be a surcharge of 5 percent on incomes above €90,000 and a 10-percent surcharge on incomes above €150,000. The tax rate on financial income would increase from the current level of 12.5 percent to 20 percent. The government also pledged to crack down on tax evasion.

The spending cuts were directly largely at local government. Giuseppe Castiglione, head of the Union of Italian Provinces, almost immediately bemoaned the government cuts, which he said would fall most heavily on direct services to Italians: "When you talk about municipalities, you're talking about social services, when you talk about provinces, you're talking about schools, security at school, local roads."

An analysis just released by the Federal Reserve Bank of San Francisco concludes that most of what Americans spend on consumer goods, electronics, clothing, sneakers and the like, stays in America. Surprisingly little comes from China after all. Say the authors:

Goods and services from China accounted for only 2.7% of U.S. personal consumption expenditures (PCE) in 2010…Chinese imports make up only a small share of total U.S. consumer spending…

Athough globalization is widely recognized these days, the U.S. economy actually remains relatively closed. The vast majority of goods and services sold in the United States is produced here. In 2010, imports were about 16% of U.S. GDP. Imports from China amounted to 2.5% of GDP.

The Little America Hotel in downtown Salt Lake City was abuzz with activity and excitement when your reporter arrived on July 14 for the opening of the U.S. & China Trade, Culture & Education Conference 2011. Throngs of Chinese delegates and journalists packed the lobby, while still more delegates from the People’s Republic of China (PRC) disembarked from limousines and tour buses at the hotel entrance. The scene was much the same across the street at the hotel’s pricier corporate sister, the Grand America Hotel, which served as the main venue for the National Governors Association Annual Meeting and U.S.-China Governors Forum.

My first order of business was to pick up my press credentials for the Trade, Culture & Education Conference, which was being sponsored by the American & Chinese Friendship Promotion Society. Unfortunately, I arrived at the credential room a few minutes too late; the man in charge had closed up and departed for the afternoon, taking the press badges with him. Mine would be available the next morning, in time for the main events, his assistant assured me. In the meantime, the assistant said, since he had seen my name on the list of officially approved journalists, I could use the press badge of Le Yeng, a Chinese journalist who had not shown up, to get into the afternoon’s remaining events.

Although I remain something of a talk radio junkie, it has been some time since I recognized that the “conservatism” of the air waves is really nothing of the kind.  That is, much to my disappointment, it isn’t “conservatism” that “conservative” talk radio tends to promote but neoconservatism, or at least Republican Party politics (which is for all practical purposes the same thing). Still, I continue to listen to talk radio regularly, and just as regularly find it instructive. For the latest pearls, I have nationally syndicated host Mike Gallagher to thank. Gallagher expressed incredulity over the response of some “on the left” to the recent killing of Navy Seals in Afghanistan.

The Afghan war, being a decade old, is the longest war that America has ever waged. In spite of this, our military suffered more casualties in a single day this past weekend than it has suffered on any given day since this war began. Not surprisingly, these facts are being taken by an ever growing number of Americans as further confirmation of their skepticism toward this Middle Eastern adventure. Our mission in Afghanistan, they reason, if it ever had any coherence at all, has lost intelligibility: it is time to either radically revisit our objectives or, at long last, to bring the troops home.
 

The latest report from the Board of Governors of the Federal Reserve System confirms what every sentient being already knows: The economy is in the dumper, with little improvement expected. The report used words like “considerably slower,” “deterioration,” “flattened out,” “weak,” and “depressed” to describe current conditions, and it even noted that excuses such as bad weather and the earthquake in Japan “appear[ed] to account for only some of the current weakness in economic activity.” (Emphasis added.)

In other words, the Board had a BFO (blinding flash of the obvious) and finally had to come clean and admit that after two years of trying to stimulate the patient back to health, nothing has worked, and the patient is getting sicker.

The White House announced Tuesday that Ron Bloom, Assistant to the President for Manufacturing Policy and leading engineer of the auto bailout, will be leaving the Obama administration this month. White House officials say Bloom will be replaced, but in the interim, Gene Sperling, the Director of the National Economic Council, will expand his day-to-day focus to manufacturing.

"For the past two-and-a-half years, Ron Bloom's leadership and expertise has helped us put America's automakers back on the road to recovery, launch new partnerships to make our manufacturers more competitive and set aggressive fuel economy standards that will save consumers and businesses money at the pump," President Obama professed in a statement. Bloom complemented the President’s remarks, saying he is "confident in this administration’s ability to build on these accomplishments and continue our efforts to revitalize the manufacturing sector."

The stock market is in freefall once again, evoking specters of 2008. As one fund manager told the Wall Street Journal on Monday, “the sense of déjà vu is almost sickening.” The storied Dow lost more than 600 points Monday following huge declines late last week, appeared to get its footing yesterday, then plunged more than 500 points today. All over the world, markets are taking stock, so to speak, of the burgeoning debt crisis in the United States and Europe, and fearing the worst.

Despite the parallels with the autumn of 2008, the Wall Street Journal views the two crises as stemming from entirely different causes. Wrote the Journal’s Franceso Guerrera on Tuesday:

"The Fed spoke and financial markets rallied," began the Associated Press report on how the stock market responded after the policy-making panel of the Federal Reserve Board issued a statement Tuesday, saying the federal funds rate (the interest banks charge other banks for borrowed money) would be held to 0 to 1/4 percent through the middle of 2013. The Dow Jones industrial average surged more than 429 points, just one day after its biggest decline since 2008.

But the Fed's influence over the volatile stock market is of short duration and its ability to bolster a sagging economy is illusory. The Federal Open Market Committee's promise of low interest rates was accompanied by an assessment of current market conditions that look anything but promising. "Indicators suggest a deterioration in overall labor market conditions in recent months, and the unemployment rate has moved up. Household spending has flattened out, investment in nonresidential structures is still weak, and the housing sector remains depressed," the committee reported. On the plus side, "business investment in equipment and software continues to expand."

Senate Majority Leader Harry Reid was the first to announce his three nominees to the “Super Committee” created by the recent debt ceiling increase, and all three fit the mold of big-spending liberals: Senators John Kerry (D-Mass.), Max Baucus (D-Mont.), and Patty Murray (D-Wash.), the latter of whom will also serve as co-chairman of the committee. Reid observed of his picks:
 

In Don Marquis' classic satirical book, "Archy and Mehitabel," Mehitabel the alley cat asks plaintively, "What have I done to deserve all these kittens?"  That seems to be the pained reaction of the Obama administration to the financial woes that led to the downgrading of America's credit rating, for the first time in history.

There are people who see no connection between what they have done and the consequences that follow. But Barack Obama is not likely to be one of them. He is a savvy politician who will undoubtedly be satisfied if enough voters fail to see a connection between what he has done and the consequences that followed.

To a remarkable extent, he has succeeded, with the help of his friends in the media and the Republicans' failure to articulate their case. Polls find more people blaming the Republicans for the financial crisis than are blaming the President.

JBS Facebook JBS Twitter JBS YouTube JBS RSS Feed