Ireland's Pickle

Ireland is following in the American footsteps of harmful spending mistakes. They closely resemble our own problem with banks and home foreclosures. CNN reports:

Irish banks, like others around the world, loaned money to people who in some cases couldn't pay it back. Cheap loans created extra demand for housing and as prices surged the construction industry raced to build more.

 Just as the economy of America is getting back on it's feet, Ireland falls over on itself. The hangover of reckless funds is settling in resembling our recent fall in 08. Ireland is not asking for outside aid though, while America received China's aid. I feel as if history is just repeating itself. It appears that countries around the world need to enact reforms to their spending habits and to revive from their economic slumps. This is easier said than done, but I believe we can learn from our past and move onto more pressing problems.

Balance the Budget

The NYTimes has a game you can play, balance the budget!

One potential aspect of balancing the budget is basically to cut military spending. This could potentially save around 262 billion by 2030. This is a very strict cut most people would most likely agree with, along with myself. Though, I do believe some cuts can and should be made. Here is a quote from Wired about the relationship between the deficit and military.

 Whether Washington politicians will actually cut defense is uncertain, even with the giant federal deficit and weak economy. The incoming chairman of the House Armed Services Committee, Rep. Buck McKeon, said on Monday that defense cuts were a “red line” for him. And the Pentagon leadership is focused on spending its cash more wisely, not necessarily spending less of it. Adams noted that the military wasn’t immune to cuts during the deficit-slashing attempts that defined the late 80s and most of the 1990s. But that was before the U.S. got attacked on its own soil and launched two wars with murky endpoints.

If we start pulling out more troops, we will eventually be able to save more than 100 billion. Military is a major investment that we need to have until there is world peace, which will most likely never happen in our lifetimes. However, where we are almost 14 trillion dollars in debt, so saving money is a high priority. Who knows what will happen though, we can only try to make a difference and watch.

U.S trade deficit is not really looking up...

New York Times reports that the trade deficit between the U.S. and China is still widening. The capitalistic nature of America is pushing American business to outsource and to buy products from China because of the lower prices of labor.

"The trade deficit grew to $46.3 billion, up from a revised $42.6 billion in July and exceeding forecasts for a gap of around $44 billion. The deficit with China accounted for $28 billion of the August shortfall, up from $25.9 billion the month before.
The widening gap with China comes amid rising concerns in Washington about China’s trade dominance and its effect on the global economic recovery. The Obama administration and some lawmakers are pressing China to allow its currency to appreciate more quickly, hoping it will temper Chinese exports by making them more expensive"

The article continues with:

“The only way this works in reducing the U.S. trade deficit is if U.S. consumers shift their consumption of Chinese goods to U.S.-produced goods,” said Dan Greenhaus, the chief economic strategist for Miller Tabak & Company. “You need to increase the appeal of U.S.-based goods.”

Even the thought of making U.S. based goods more appealing is difficult to conjure. Looking around my house, I bet three fourths have a label saying "made in China". Simply, American goods are more expensive in general and may by worse than their Chinese counterparts. One classic example is the automobile industry where Ford is having a horrible time while companies like Toyota are thriving in relation. The better reliability and price do drive home the unfortunate idea that America is not the best at everything.