The Economist, U.K.

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Empire or Nation?: America's Internal Contradiction (La Vanguardia, Spain)

"The U.S. political class has accustomed us to watching as its disagreements bring the global economy to the brink. This time it was the 'fiscal cliff,' while before it was the 'debt ceiling,' and even further back, in the twilight of the George W. Bush presidency, the bank rescue plan.  ... This is a manifestation of the contradiction that has for so long differentiated U.S. political life. It is a conflict between the needs of a colossus that commands the global economy, and the dynamics of the political debate, carried on in terms that seem alien or even contrary to such imperial responsibilities."

By Perez Menal

Translated By Neus Coll Ruiz

January 6, 2013

Spain - La Vanguardia - Original Article (Spanish)

The Spanish risk premium reported a spectacular drop yesterday - a record 40 points in a day. [The fact that the Spanish risk premium dropped is positive. See below] The trigger for this sharp fall was certainly not promising recent data on development in Spain's economy - to say nothing of the eurozone. Europe was hurt again yesterday with the release of industrial production records showing that Europe's return tour of recession is coming faster than previously thought. There wasn't even a reassuring announcement from European Central Bank President Mario Draghi.

[Editor's Note: Spanish "risk premium" is a measure of the difference of investor confidence in Spanish 10-year sovereign debt and triple-A German sovereign debt. From a high of 647 points last June, Spanish risk premium is now 352, which means Spanish sovereign debt is becoming relatively more appealing to investors compared to German sovereign debt].

The miracle balm was an agreement among the U.S. Congress, Senate, and President Obama. This lends importance to the country as a factor in the global economy. Before issuing overly-blunt analyses, the apostles of U.S. decline should take events like these into account.

Officially, what's going on in Washington these days is pretty easy to understand from a European perspective. Political alignments are similar to those occurring on the eastern side of the Atlantic. Led by Obama, the center-left Democrats (liberals in U.S. political parlance) emphasize higher taxes on the rich in order to maintain acceptable levels of social spending, and without adding to the out-of-control deficit. The Republicans, by contrast, can be seen as similar to the center-right on the Old Continent, railing against tax increases and emphasizing cuts to social spending. As you can see, not a far cry from the political debate in Europe (although from within government, one finds it hard to distinguish one from other).

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Despite the drama with which we tend to handle matters, it should be noted that the tax increases that have been agreed to in Washington are an innocent game compared to what has happened in recent times in Spain, let alone Catalonia. For U.S. families with an income of over €340,000 a year [$450,000], the marginal tax rate will rise from 35 percent to 39.6 percent. That's a far cry from the 56 percent Catalonia residents who earn over €300,000 [$395,000] have to pay. But the political climate in the world's largest economy is very different, and opposition to tax increases meets with rejection, not only by those affected, but as the basis of a broad populist movement - the Tea Party.

SEE ALSO ON THIS:  

Handelsblatt, Germany: Political 'Fare Dodgers' Reject Fiscal Cliff Deal, Benefit from it  

De Morgen, Belgium: If America can Finally Tax the Rich, Why Can't We?  

Xinhua, China: 'Fiscal Cliff' Chicken Game Exposes Failings of U.S. Political System  

Economist, U.K.: Belated Fiscal Cliff Deal: America's E.U. Moment

The U.S. political class has accustomed us to watching as its disagreements bring the global economy to the brink. This time it was the "fiscal cliff," while before it was the "debt ceiling," and even further back, in the twilight of the George W. Bush presidency, the bank rescue plan. On all of these occasions, a clash between major party factions unleashed a wave of fear and instability in the markets. Just like it has this time.

Posted by Worldmeets.US

This is a manifestation of the discrepancy, or contradiction, qualify it as you will, that has for so long differentiated U.S. political life. It is a conflict between the needs of a colossus that commands the global economy and the dynamics of the political debate, carried on in terms that seem alien or even contrary to such imperial responsibilities. Allied with Wall St., the powerful Treasury Department faces off against Congress, which has staged a confrontation with the reviled financial sector. It is empire against nation.