The Cynical Economist

Here you have it people – Christine Lagarde a lawyer and a political hack and now a head of the  IMF urging the US politicians to make the american people and the future generations of this country debt slaves.

From CNBC

The International Monetary Fund’s new chief foresees “real nasty consequences” for the U.S. and global economies if the U.S. fails to raise its borrowing limit. Christine Lagarde, the first woman to head the global lending institution, said in an interview broadcast Sunday that it would cause interest rates to rise and stock markets to fall. That would threaten an important IMF goal, which is preserving stability in the world economy, she said.

But TCE found an archive on the web, where the double talking Lagarde  had another plans for the French people and their future…Cutting debt, reducing deficits and tweaking the French social security.The interview was with PBS a year ago (July 7, 2010)

From PBS

PAUL SOLMAN: Economically, France vs. Germany seems to mirror the main sort of economic issue of our times, or of right now, which is stimulus vs. austerity, or bailouts vs. budget cuts.

Europe can’t do both, can it? It can’t do everything.

CHRISTINE LAGARDE: Yes, it can.

We always we have to strike the right balance between continue to stimulate. And most of us still have a little bit of stimulus under our foot in order to accelerate that fragile growth that has picked up in 2010. But, at the same time, we must, very decisively, cut our deficit and reduce our debt. Now, how do we cut deficit? There are two ways. One is, we reduce public spending. And, certainly, as far as France is concerned, we can do a bit, because, at the moment, it is the biggest public spender in the European Union. So, we can cut public expense. The other way to reduce deficit is to collect tax. And we’re going to automatically collect a bit more tax in 2010 than we did in 2009.

So we have to do it too…America has to cut its debt and reduce the deficit. See even the now IMF head said it then – It can be done and should be done because France is the biggest public spender in the EU. America has to cut its spending because USA IS THE BIGGEST PUBLIC SPENDER IN THE HISTORY OF THE WORLD!!!LOL

CHRISTINE LAGARDE: The first priority is a bit of rigor in order to cut deficit, reduce deficit, reduce debt, by specifically targeted tools, but we also want to stimulate growth.

PAUL SOLMAN: You know, when Americans see French workers in the streets protesting a rise in the retirement age at which you get a pension from 60 to 62 over the course of a decade, when the Germans are going from 65 to 67 in a year, I mean, they roll their eyes.

CHRISTINE LAGARDE: It’s not as simple as that. We are moving from 60 to 62 before 2018. And, in 2018, the whole pension scheme program will be balanced. So we reduce the deficit by pushing out the limits from 60 to 62 and by various other means, because we are going to also raise the financing of the pension scheme.

See… The French raised the retirement age and their social security(government pension program) will have money to pay retirees.  But Americans should not talk about social security reform. Oh NO!  The world economy will get in a depression, if America reform social security.It is  better to borrow these dollars we need for social security payments to cover the hole in the system, right?

CHRISTINE LAGARDE: The economic policy that we are adopting with that rilance, with a bit of cutting deficit on the one hand, a bit of stimulating growth on the other hand, is a constant fine-tuning exercise, because we want as our first priority economies to develop value and to create jobs. And this is my constant obsession: How are we going to create jobs in Europe?

Gee I do not know. I am just a cynical economist. But  since you are a politician and an experienced lawyer you tell me!… NOT!

And here it is reminder of how deep into the shit we are and why we should seek our own interest  as  a  country and not listen to the  people who are encouraging politicians to subscribe  US to take more debt…

CBO: Stimulus helped almost doubled U.S. debt

A new report from the Congressional Budget Office (CBO) finds that President Obama’s economic stimulus program helped nearly double U.S. debt.

The 2011 Long-Term Budget Outlook, released Wednesday morning, reports that the “the combination of automatic budgetary responses” and Obama’s stimulus “had a profound impact on the federal budget.” According to CBO projections, before Obama’s stimulus became law, federal debt equaled 36 percent of GDP and was projected to decline slightly over the next few years. Instead, thanks in large part to the stimulus, debt reached 62 percent of GDP by 2010.

Other lowlights from the report include:

• Debt will reach 70 percent of GDP by the end of this year – the highest percentage since World War II.
• Spending on Medicare, Medicaid, and Social Security will reach 15 percent of GDP by 2035 – spending on all government programs has averaged 18.5 percent over the past 40 years.
• Total government spending is set to hit 27 percent of GDP by 2035.
• Taxes are set to grow from 19 percent of GDP in 2013, to 23 percent by 2035.
• Americans “at various points on the income scale would pay a larger percentage of their income in taxes than people at the same points do today.”
• The effective marginal tax rate on labor income would rise from about 25 percent now to about 35 percent in 2035.