Get Fiscal

The Greek government has approved a tough austerity package to avoid default on loans to Eurozone countries, and to accept a bailout fund of around 130 million Euro. In Athens, meanwhile, youths have been attacking police vehicles and government buildings with rocks, and whatever else they can find.

Australia has always been known to hold a mutual relationship with the USA over matters of security and political views. This relationship has been held in place since world war two and is glued together by America’s economic gains on Australia and Australia’s security and political gains from the USA. Critics however argue that this relationship has to end already; or is about to crush very soon. And there are solid reasons to that according to the critics.

One, Australia has been known to always support the US Government and its policies in whatever decision they make; whether economic, social or political. And we can understand why, the USA’s dominance on the international water is a strategic position for Australia to benefit from America’s strong security system plus borrow a few political ideas to govern its citizens. Here is the eye opener; the recent war on Iraq by the US brought heavy scrutiny on the genuineness of Australia’s long and loyal friendship. The Iraqi war was a controversial move that put America on a tight spot politically; their tactics were questionable and rash, and the funny part was that Australia still supported the idea to the book.

The America-Australia tie is a weak one and may be lacking trickles of genuineness on it. If Australia were independent on their thinking, they would have warned their long-term alley about the negativity of their approach to fight terrorism in Iraq. Instead, the Indian Ocean continent kept silent about it and USA took the hit for the worst security policies ever beyond their borders. Critics believe that Australia only tags along because of the mutual benefits and would likely end the friendship when this benefits collapse.

As it is, there may be the likelihood of a collapse of the ties between these two ‘best friends’. Economic roles are changing as Australia is booming in GDP while the USA is slowly running bankrupt in the background. The roles are now changing and it is time for Australia to offer a helping hand to its long-term friend. It is predicted that Australia may take the reins of international dominance from the previous Superpowers; America included. As it is, America has always guarded this position dearly and nobody knows of how willing they are to let go. Australia is yet to decide whether it will take a self-reliant position now that its long-term friend is slowly disappearing out of the dominance map.

The economic forces on the other hand are working independent of the two sides’ opinions. The mining boom in Australia is putting the country on the line up of emerging super powers; America on the other hand is yet to come to terms that gone are the days of being looked up to by other nations. The costs over-weigh the benefits of holding onto such ties, and if critics have their way, Australia and America will have their last tearful hug.

Whilst I agree with the sentiment of concentrating on long term job growth as a significant contributor to the GDP and tax growth in the US, it is still prudent to look at wasteful public expenditure which does not add to GDP.

The economic future of the European block is quite a shaky one according to market trends that have been witnessed; as well as social reactions to the economic changes in question. Fiscal policy measures in a good number of EU members seem to be dwindling, and speculations about a dreary future have been the riding headlines in the media.

Fiscal policy mentions a Government’s adjustment in spending level in order to control and influence the nation’s economy positively. However this has not been the case for the European nations; fiscal policy has plummeted due to increase in debt crisis in the Euro zone market. The images of the gruesome protests in Greece remain fresh in our mind, and this was the red flag for the European Union that things weren’t going well with the Euro.

Rumor had it that Italy, Ireland, Portugal and Spain was following the same trend; the Government couldn’t regulate its spending and this resonated in a cringing economy. The truth is out, the Euro zone economy is not heading uphill as we would expect of a world economic Super power. And the old saying couldn’t fall out of relevance, when Europe sneezes, the world catches a cold.

We have all had a taste of what a dying economic in the Euro block affects the economies of other continents. It’s hard to imagine that a few mathematical errors inside European banks could lead to increasing cost of living in other countries. But it’s true and one wonders just what could have been the problem up in the Euro block?

Heavy uncontrolled spending by the different EU members is one factor of the fiscal meltdown. Cases of increased public debt have been on the rise and great numbers of the EU members were affected by such poor fiscal discipline; Greece happens to be the country that took the hardest blow on debt. Today Greece suffers an economic blow with existing banks having the hard time of answering this one question: “Where did the money go?” The Euro zone needs some heavy lesson in fiscal discipline, a measure that all of the EU members must embrace to change the situation to a better one.

However, a deeper problem lies within the structural design of the Euro currency and how cash flow happens in the Euro block. The EU members are ruled by one central block that controls the monetary policies of its members; fiscal policy measures are left to the EU countries to manage. Why is this a problem? For an economy to stabilize, both fiscal policy and monetary policy have to work hand in hand. But all this is theory, the a great deal of EU members made economic messes in their fiscal decisions and the central bank has no clue how to clean after their messes.

There may be discussion of bail out plans for countries like Greece and Italy; but until the Euro architecture changes, headlines won’t stop reading about bankruptcy cases. So the feature of the Euro block is uncertain as to whether they’ll revise the fiscal plan within its members. The rest of the world can only keep the fingers crossed lest they catch the proverbial cold.

Ok, so let's switch the emphasis a little bit: China - where is it headed next?

The US Dollar has shown signs of a bleak future and the Euro is also following the same path to destruction. And just as the US and the EU block try to formulate new economic policies, a new liability to their profits shows up, China.

From what the market trends are showing us nowadays, the previous economic super powers are exiting economic dominance; and China must be receiving a red carpet welcome right at the entrance. China’s import market is getting a boom of demand that threatens the very shaky economy of the America and the EU. China’s number one secret weapon is cheap prices in a good number of goods they produce.

China has a production base on almost everything; from kitchen ware to electronic appliances and circuit board that are commanding a huge market share. Competition is there with other commodities produced by the likes of USA and the European countries, the problem however is that China is charging about half the price on its products compared on the rival products. This for a country like America translates to danger if they don’t regulate their pricing; the dilemma however is that going down in price means losing business and refusing to come up with a solution also kills them financially.

There are more facts to back the last claim above; critics revealed a documentation which showed that the US troops were signed to vacate Iraq by 2011. The Iraqi surge was tailored by the Bush administration and it was staged to clock out by last year when the mission to subdue Iraqi rebels was successful. The same 2011 is when the Obama administration claims success in bringing troops back home; critics haven’t been happy with that and have labeled this as an act of dishonesty and total lack of shame.

The media can never mention such details, it is even said that the Bush administration wanted a few troops left behind to ensure Iran doesn’t intrude on the weaker Iraq. The Iraqis also wanted a few troops around to help restore sanity to their country, so vacating all troops meant living Iraq to fend for itself against scavengers like Iran. Obama was also quoted saying that the end of the Iraqi war was a result of diplomacy and not force; Obama credited the Abnar Sheiks for agreeing to dialogue with the Obama Government. But the reality? The same Sheiks have no kind words for the US troops, not even today.

It’s a thin line between truth and lies and the facts strongly suggest which side of the coin the Obama administration is in. Critics still have something to say, they do not by all means believe that the Iraq war is over and truth should still be stationed in Iraq for reinforcements. Taking out troops was a dishonor to the years of sacrifice and bloodshed to win the Iraqi war. The vacation plan is a sign of cowardice from the Obama administration where the Bush Government would have advocated for troop reinforcements to Iraq.

During his presidential campaigns, US president Barrack Obama gave the promise that he will successfully evacuate all troops from Iraq and restore peace in Iraq. Three years down the line, the troops are sent safely to America, the Obama administration makes headlines for a historical success and the whole world was happy about everything…or was it?

A few times back Barack Obama (US president) and Iraqi Prime Minister Nouri Al Maliki posed for a photo in what was dubbed, ‘The end of the Iraqi war”. US state troops returned home after about 9 years of battling radicals in Iraq, the war was won by US and the Obama administration popped champagne over it. But the critics did not.

Not every American views the Iraqi war as a success by the Obama administration; whatever victory the present Government is celebrating is in fact owed to the previous Government. That aside, the view of the Iraqi war is viewed as both successful and a failure depending on whether you are a liberal or a conservative. Those in support see the evacuation move as a victory and the necessary measure to ending nine years of meaningless war.

According to the humanitarian supporters, thousands of lives were lost in Iraqi while trying to subdue the Iraqi forces. It was unfortunate that innocent women and kids were caught in the crossfire; more unfortunate, the world had to learn about these incidences through the horrific footages shown by the media. The war definitely had to end to prevent more arbitrary killings of innocent lives.

And how do the critics respond to that? Backing out is a dishonor to the 4400 brave soldiers who lost their lives in the war. The conservatives have their own sad story to tell as well, that of thousands of soldier remains laying in a desolate Iraqi landfill. If the troops are vacated it is a sign of dishonor to the wounded soldiers. The Iraqi war was fought in the spirit of restoring sanity in Iraq and helping the country wade off enemies like Iran who threaten to take over the country. Thus according to conservatives, vacation of the US troops was a death warrant to the Iraqi locals who cannot fend for themselves.

Iraq happens to be the one country that still upholds democratic sanity in its political decisions; Government formations are done in an organized election basis. At this point in time, Iraq has no strength to pick up from the ashy remains and the presence of the US troops was a source of strength to them. The Obama administration should have reconsidered leaving reinforcement behind, but the reality is that democrats and republicans are still bashing each other over this matter.