Fiscal disasters are everywhere, here & abroad. The debt problem won't disappear regardless of the social unrest whether it's in California or Athens.
Looking longer term, without fiscal discipline, it's going to be either inflation or restructuring.
To date, the govts here & Europe have absolutely picked loose monetary policy. Results? Currency debasement, which in & of itself could spell high inflation. In the past 5 years, the USD has declined 31% vs the SWF. The Euro has fallen 22% vs the SWF in the same period. Here in the USA, we're borrowing 40% of our annual spending & overall debt is approaching 100% of GDP (incredible). In a somewhat ironic turn, Swiss officials have complained of late that their currency is hurting their economy (exports). I guess that's the odd effect of running the sole fiscally responsible government entity on the planet.
China's due for a hiccup. They're heavily dependent upon unsustainable infrastructure & construction investment.
JohnnyboyUtah, don't try to understand any of this.
Your local ER is already swamped with people complaining of headaches.
Monitary policy is a big problem to be sure. The American Dollar has lost over 50% of its value since 2001. Mainly due to the Federal Reserve printing more and more money.
China is risking a huge bubble becuase they are growing at an unsustainable rate.
The next major problem looming right after this debt ceiling debate, is Washington wants to pass trade deals with Columbia, South Korea and Panama. We do not need any more trade agreements unless the United State benefits FIRST from the agreement. Exporting more jobs to poorer countries that we cannot compete with is idiotic in the extreme.
One of the proposals floating around in many of the debt reduction plans is changing the CPI used for calculating the COLAs. The CPI being proposed is called the chained-CPI. In recent times the chained-CPI results in a smaller COLA than the CPI set by law -- for this year it would result in something more like a 2 percent increase rather than a 3 percent increase. The chained-CPI, it is argued, more accurately reflects the costs for consumers (and applies "substitution" in the basket of goods purchased by consumers, i.e., consumers will buy more ground chuck than ground sirloin when they have less money or prices increase, so therefor they need less of a COLA [one could also argue that if you provide less of a CPI then you socially engineering SS recipients to buy ground chuck rather than ground sirloin]).
There are plenty of other examples where assertions are not buttressed by the facts, e.g., on unemployment levels stability, "bail outs" (of the financial and automotive sectors), recovery act stimulus money (most of it was in the form of one-time reduced taxes), so on. You are correct that many of these actions were initiated during the prior administration.
On the other hand, trade agreements are good for markets when they expand markets, i.e., make the pie larger for all to share in.
Declining dollar also makes imports more expensive, such as Oil.
There is no such thing as a free market. Every country engages in protectionism with tarrifs and limits on goods and services allowed in/out of their country. The problem is we do not negotiate our trade deals in good faith for the American people but for American business'. China pays 2% tarrif to export into the US. We pay 20% tarrif to export there. Hardly free and hardly fair to us in being competitive. Our current trade agreement with South Korea allows S. Korea to ship 200,000 automobiles here a year. We get to ship them 20,000. That is not a free market. That is South Korea setting limits in the intrest of protecting their own economy. Something we here in the United states should consider.
Even with a declining dollar to make exports easier to sell abroad, we can still not compete with manufacturing in countries that pay $1.00 a day and are exporting to the same countries we are trying to sell to.