"After America postponed its jump off the fiscal cliff in the small hours of Tuesday night, world stock markets soared. Anyone listening to the BBC yesterday with its headlines praising Barack Obama would think something quite profound had changed in the world’s greatest — if battered — economy. However, it has not.
Intractable problems — chief among them chronic over-spending and weak consumer demand — have still not been solved.
The tackling of those issues has merely been postponed until the end of next month, when America’s legally enforceable ‘debt ceiling’ will probably be reached.
That will be the moment that U.S. debt passes a pre-determined point — north of $16 trillion — and a raft of dramatic public spending cuts will be triggered.
However, America’s politicians — especially its weak-willed President — may lack the guts to act even then to reduce the debt. .......America more closely resembles Europe in living beyond its means and in the President’s determination to build a massive welfare state.
The danger is that none of his political opponents is powerful enough to force through the decisions that would draw the U.S. back from its economic precipice. They need to find massive spending cuts, and they won’t.
The problem is that the Democrats — who hold the Presidency and control the Senate — bribed their way to victory two months ago. ........If Mr Obama had not promised to look after all his client groups, especially among minorities, he would be back home in Chicago. Now he has to pay out on those promises.
That is pretty much the way New Labour operated in Britain, by creating a vast state sector funded by the public purse that would, in return, vote for Tony Blair and later Gordon Brown.
The long-term legacy of that self-serving policy can be seen today in our disastrous national debt.
The problem for America is that its per capita debt is worse even than ours. .....What America is doing is the equivalent of putting a bill behind the clock on the mantelpiece and hoping that it will go away.
But it won’t, it will only get bigger — and if it isn’t paid, the effects will be felt far beyond American shores."