In the second half of 2010, amidst the Economic Recession, European economies started going bust one after another. Faced with a massive chain gang effect where the collapsing like economies like Greece and Ireland could take rest of the continent with them, all European governments reined in their spending, reduced the public welfare services like healthcare and education. Great Britain unveiled the biggest shake-up in its welfare services since World War II and others followed the suit. Merriam-Webster Dictionary got so impressed by the whole thing that it named “austerity,” the word used to describe this fiscal policy, Word of the Year 2010. The European public didn’t exactly like their governments taking away their free stuff and went on streets protesting. Some students in Italy even occupied the Leaning Tower of Pisa.
Meanwhile, back in “these United States,” the public went crazy over the amount of spending government was doing. First the healthcare bill, which was supposed to massively expand public welfare services and increase government spending, was watered-down. Then an entire political movement was (of people who don’t even drink tea) was spun around less spending. And finally, American public destroyed Democrats in the 2010 Midterm elections and brought back the Republicans in the name of lesser spending.
Hmm..now I am no Sherlock, but after complex probability calculations I have come to the conclusion that someone in this scenario must be wrong. Either you should spend more or less. Or maybe the simplest solution is to move American population to Europe and send Europeans to the US. Whatever the right answer may be, I hope they find it soon enough because I am scared of China ending up dominating the global economy. (for a quick summary of reasons see #9 Hell hath no fury as China scorned)
Finally, the most insane of all in world politics in 2010 was…
China is not going to dominate anything in the long run. It is trying to make sure its economic prowess evaporates one way or the other by diversifying its investment (in foreign bonds) from US IOUs to bonds from the troubled European countries having to implement the 'austerity' measures. And to do it is already creating enough inflation at home (it does not really have the balls to implement the measures that can really contain it). And the day the value of the dollar plummets, US and China (despite China's measures to diversify its bond holdings) are going to implode taking down each other.
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