The Economist Magazine is Also Trying to Scare Us

And Doing a Very Good Job of It

The Economist is a magazine that recognizes that business and economic and political activity outside of the United State is just as important as business and economic and political activity inside the United States.  Here is what their cover this week looks like

Yes, that is a black hole.  Yes, a black hole is their symbol for the current and prospective state of economic policy as practiced by governments of America and Europe.  Yes, that afraid thing is not a joke.  This is not the type of magazine that has a great sense of humor, only a great sense of the absurd.

Why are they concerned?  Well there is this.

IN DARK days, people naturally seek glimmers of hope. . .But those hopes are likely to fade, for three reasons. First, for all the breathless headlines from the IMF/World Bank meetings in Washington, DC, Europe’s leaders are a long way from a deal on how to save the euro. The best that can be said is that they now have a plan to have a plan, probably by early November.

Second, even if a catastrophe in Europe is avoided, the prospects for the world economy are darkening, as the rich world’s fiscal austerity intensifies and slowing emerging economies provide less of a cushion for global growth. Third, America’s politicians are, once again, threatening to wreck the recovery with irresponsible fiscal brinkmanship.

Yep, that would do it.  As for America, our friends at this European based magazine have this observation.

If Democrats and Republicans fail to hash out a compromise on the deficit, draconian spending cuts will follow in 2013. For all the tirades against the Europeans, America’s economy risks being pushed into recession by its own fiscal policy—and by the fact that both parties are more interested in positioning themselves for the 2012 elections than in reaching the compromises needed to steer away from that hazardous course.

Now a reasonable observer might quibble with the observation that both parties are unwilling to compromise, but that sentiment has been put out there by so many for so long that we now know it is being said to avoid partisan criticism.  But the observation that the 2012 election season has already started is right on, and if the U. S. has moved to a period of permanent campaigns by elected officials, then those same officials will just not have time to govern, will they.