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Thread: Krugman Wishes He Were Wrong Amid EU Austerity Backlash

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    Re: Krugman Wishes He Were Wrong Amid EU Austerity Backlash

    Quote Originally Posted by Meathead View Post
    It is a very poor argument, but still an argument.
    LOL ... seriously? It is the main argument why people are pissed at Greece and wont lend them money.

    Sure Greece has massive structural problems, but we have known about them for many many decades. What we did not know, was that Greece would go to such lengths to hide the truth from the world.... that has caused a huge trust issue with Greece.
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    Re: Krugman Wishes He Were Wrong Amid EU Austerity Backlash

    Quote Originally Posted by Meathead View Post
    Greece cooked the books because they were broke, they were not broke because they cooked the books. That's is an inane argument. I understand why your article selected Portugal rather than Greece. Greece would have squarely invalidated his conclusions. The failure was lack of austerity of the parts of successive Greek governments which were more concerned to clinging to power than confronting strong unions and a bloated public sector.
    Wait...so you think austerity is making things better for Greece? Spain? Ireland is the closest thing to a success, but they've only just experienced their first quarter of growth, while we here in the US have had 11 straight quarters of growth. The UK's austerity program has resulted in 4 of their last 6 quarters shrinking and their highest quarter of growth post-recession is a mere 1/3 of what our best quarter has been.

    It hasn't been a success anywhere. It results in slow growth or (worse) a return to recession, which (as we know) only makes debt grow due to lower tax receipts. That's why debt is growing in the countries who have instituted these policies instead of shrinking. Stimulate first; then deal with the debt when the economy has recovered. There's a reason why it's been done that way for a long time; because it works.

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    Re: Krugman Wishes He Were Wrong Amid EU Austerity Backlash

    Quote Originally Posted by Fletch View Post
    I see. And who is going to buy those bonds and at what rate and at what cost to the value of the Euro?
    Everyone! A lower Euro means more exports means booming economies. Why the hell do you think Germany wants the Euro to survive? The problem with the Euro is Germany.. and their insane hatred towards printing money. With the exception of Greek tax income, most of the problems of the Euro zone would be solvable by simply printing money and devaluing the Euro. But that creates inflation... in theory... but considering inflation is very low... then well.

    Plus you seem to be pretending that Greecesw problem is something other than its inability to amke payments on the loans it has already received. You will have to explain to me how it is that the solution for a country unable to pay its debts is to increase its debt burden.
    Greece's problem is structural. IF people actually paid their taxes, then there would be a budget surplus. Problem is there is 60+% tax evasion in the country.

    The recession ended 3 years ago.
    And? Just because there is growth in a country does not mean that the effects of the recession are gone.. aint that what the Republicans are banking on to November?

    Sure, borrowing now has its advantages. The trouble is, rates will not remain this low forever and everything borrowed today has to eventually be rolled over at higher rates. What you are saying is that inflation will helop you cheat your lenders out of recovering the full value of their loans. What you havent taken into consideration is that lenders understand this. That is why rates will rise.
    Japan. Rates are at the lowest point in decades. UK, rates are the lowest rate in many decades. US, rates are at record lows. All 3 have near or wayyyyyy over 100% deb t to GDP. In Japan's case they have had over 100% debt vs GDP since the 1980s and yet their rates have been very low...
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    Re: Krugman Wishes He Were Wrong Amid EU Austerity Backlash

    Quote Originally Posted by FilmFestGuy View Post
    Wait...so you think austerity is making things better for Greece? Spain? Ireland is the closest thing to a success, but they've only just experienced their first quarter of growth, while we here in the US have had 11 straight quarters of growth. The UK's austerity program has resulted in 4 of their last 6 quarters shrinking and their highest quarter of growth post-recession is a mere 1/3 of what our best quarter has been.

    It hasn't been a success anywhere. It results in slow growth or (worse) a return to recession, which (as we know) only makes debt grow due to lower tax receipts. That's why debt is growing in the countries who have instituted these policies instead of shrinking.
    Stimulate first; then deal with the debt when the economy has recovered. There's a reason why it's been done that way for a long time; because it works.
    the only problem with this is that governments - well at least that of the USA - continue the deficit spending once the economy rebounds
    rather than retiring the accumulated debt, we do foolish things like giving more tax breaks to the rich and starting needless wars on the credit card
    for a vivid example, notice what we did after clinton left office with a balanced budget
    we are negotiating about dividing a pizza and in the meantime israel is eating it
    once you're over the hill you begin to pick up speed

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    Re: Krugman Wishes He Were Wrong Amid EU Austerity Backlash

    Borrowing and spending your way out of economic downturn, as much as it appeals to the left, is a recipe for disaster. It obviously did not work for socialist governments in Greece or elsewhere. When the money's all gone you wind up passing the hat around for donations. If you don't believe me, try it in your own personal finances. I might give you a buck if I pass by you panhandling and ranting about the injustice of banks on the street. Good luck!

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    Re: Krugman Wishes He Were Wrong Amid EU Austerity Backlash

    Quote Originally Posted by justabubba View Post
    the only problem with this is that governments - well at least that of the USA - continue the deficit spending once the economy rebounds
    rather than retiring the accumulated debt, we do foolish things like giving more tax breaks to the rich and starting needless wars on the credit card
    for a vivid example, notice what we did after clinton left office with a balanced budget
    To be fair.. the US has not since WW2 had such a large debt, so it has never been a problem. Now it is. Last time you did have such a debt ratio, you did cut, you did run surpluses (or small deficits under inflation) and your debt ratio did go down.. granted you did grow your way out if it too

    If you look at Europe, countries with high debt ratios over the last 60 years in Europe, HAVE cut during good times, and paid off debt. Denmark is a good example of that.... Denmark was Greece (without the lax tax collection) in the late 1970s.. on the verge of bankruptcy. Hell the UK was on the verge of bankruptcy as well in the late 1970s and got their act together. It has been done and can be done. That is also in large part, why Europeans relative to Americans are extremely pessimistic when it comes to economics.. a small sneeze in the economy and we stop spending because of fear of the future. It also means that tax cuts often dont work in Europe as they maybe would in the US.. we pay off personal debt or save up with our tax cuts instead of go spend it on a new car.
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    Re: Krugman Wishes He Were Wrong Amid EU Austerity Backlash

    Quote Originally Posted by PeteEU View Post

    Greece's problem is structural. IF people actually paid their taxes, then there would be a budget surplus. Problem is there is 60+% tax evasion in the country.
    Sorry, while a significant problem, that statement is crap.

    Greece has one apparently simple option for reining in a budget deficit that has roiled financial markets: Clamp down on widespread tax evasion, which costs the country an estimated €15 billion ($20.5 billion) a year, an amount that would pay off a big chunk of the budget deficit.

    Greece Grapples With Tax Evasion - WSJ.com

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    Re: Krugman Wishes He Were Wrong Amid EU Austerity Backlash

    Quote Originally Posted by Meathead View Post
    Borrowing and spending your way out of economic downturn, as much as it appeals to the left, is a recipe for disaster. It obviously did not work for socialist governments in Greece or elsewhere. When the money's all gone you wind up passing the hat around for donations. If you don't believe me, try it in your own personal finances. I might give you a buck if I pass by you panhandling and ranting about the injustice of banks on the street. Good luck!
    And THAT is your problem and the problem of right wing US politics these days... .

    You can NOT compare your personal finances with that of a country.

    First off, a country will never run out of money. Taxes will always be paid. Only time that this will stop is during a civil war.. which is not realistic.. Now you can easily run out of money.. no job, no savings means no money. That simply wont happen for a country.

    Secondly.. if we start comparing personal finances with that of countries, then you got a huge problem. Most people have debt vs gdp (income) of several hundred percent. Got a mortgage?

    The average house price in the US is around 200k...

    Latest U.S. Home Prices Show Your Largest Asset May Be Withering Away | The Business Desk with Paul Solman | PBS NewsHour | PBS

    It varies depending on region of course.

    The annual average income (aka GDP for the single person) was about 47k .. lets be large. and say 50k!... also depends on region..

    So you got a mortgage that is on average 200k, and you earn on average 50k.. that is a debt vs GDP of 400%!

    Now that must mean that everyone that has a mortgage must be bankrupt.. after all, a country with 100+% debt vs GDP is seen as in serious trouble if not bankrupt these days according to the right wing kitchen table economic theory.
    PeteEU

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    Re: Krugman Wishes He Were Wrong Amid EU Austerity Backlash

    Quote Originally Posted by Meathead View Post
    Sorry, while a significant problem, that statement is crap.

    Greece has one apparently simple option for reining in a budget deficit that has roiled financial markets: Clamp down on widespread tax evasion, which costs the country an estimated €15 billion ($20.5 billion) a year, an amount that would pay off a big chunk of the budget deficit.

    Greece Grapples With Tax Evasion - WSJ.com
    First off that article is from 2010.

    The tax evasion problem varies from 15 to 20 billion a year. The deficit for 2011 came in around 18 billion.

    A deficit of a billion or 3 would mean defacto that they are under the 3% deficit target, plus depending on inflation would actually start paying off on the debt. If you talk only on a primary surplus point of view.. then they would have a huge budget surplus.

    So no, my statement is not crap.. it is very real and factual. Now there are some that are massive tax dodgers (about 15k people according to some numbers) that owe 45 billion Euros in taxes, and then there is the shadow economy which according to some accounts for 25% to 35% of the overall economy.

    Fact is, much of Greeces problems are related to a poor tax collecting system.
    PeteEU

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    Re: Krugman Wishes He Were Wrong Amid EU Austerity Backlash

    Quote Originally Posted by PeteEU View Post
    And THAT is your problem and the problem of right wing US politics these days... .

    You can NOT compare your personal finances with that of a country.

    First off, a country will never run out of money. Taxes will always be paid. Only time that this will stop is during a civil war.. which is not realistic.. Now you can easily run out of money.. no job, no savings means no money. That simply wont happen for a country.

    Secondly.. if we start comparing personal finances with that of countries, then you got a huge problem. Most people have debt vs gdp (income) of several hundred percent. Got a mortgage?

    The average house price in the US is around 200k...

    Latest U.S. Home Prices Show Your Largest Asset May Be Withering Away | The Business Desk with Paul Solman | PBS NewsHour | PBS

    It varies depending on region of course.

    The annual average income (aka GDP for the single person) was about 47k .. lets be large. and say 50k!... also depends on region..

    So you got a mortgage that is on average 200k, and you earn on average 50k.. that is a debt vs GDP of 400%!

    Now that must mean that everyone that has a mortgage must be bankrupt.. after all, a country with 100+% debt vs GDP is seen as in serious trouble if not bankrupt these days according to the right wing kitchen table economic theory.
    This too is nonsense. When you are buying a house, you build equity. That is an asset. It is not a difficult concept for most.

    Furthermore, your claim that taxes will always be paid, while true, ignores the fact that a country like Greece spends far more than it receives in tax revenue. You don't have to lose your job to go broke. Just spend more than you take in. In that sense, your private finances are not unlike finances on a state level. Try it if you're stupid enough.

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