With France reverting back to its noodle-spine self by voting in a Socialist again, the EU is screwed. Soon as you give the European parasites an inch of slack, they take another mile.
They are out of other people's money, a concept that socialists cannot comprehend. We'll watch them feed on each other from here.
There is always going to be someone irresponsible in a currency union. The euro was a mistake, because it was based on political and not economic reasons. The euro lets countries decide their own wage level, but to be competitive then you need to have a wage level corresponding to your current account. With currencies, then countries who inflate their wage levels will experience inflation. In the EU, it means large current account deficits, and then a complete crash. Because of the euro, the countries can't adjust and the other countries are dependant on them. The euro means that any country being irresponsible can drag the whole region down. Imagine it was France, and not Greece.The problem with Greece goes back much further, they did not have an economy that really allowed them to be a full member in the Euro along with their inability to collect taxes in a sufficient manner, but the bigger problem was the speculating and over-valuation of Greek properties/businesses. Now they are defaulting from the world-wide recession. It is up to the EU whether it wants to lose a member state (and I think that would be a good thing for Greece to do, they need to regain control over their own currency).
Fairy tale? Are you kidding me? It is probably the most important factor in an economy. If people have no confidence the economy will recover, then they won't invest. If they believe the politicans are going to mess up the economy, then they won't invest. That is basic economics, and common sense.Ah, the confidence fairy tale.
Austerity, the reduction of govt spending on top of reduced private demand will always lead to extended, deeper recessions. We already know that.
Reduction of government spending will of course lead to deeper recessions, but sometimes it is neccecary. Its not like it will never work. As I have pointed out, Ireland was probably in the worst situation, and they are doing ok now. Also, Iceland cut massively over one year. Their GDP dropped massively. But after a year or two it got better. The much better way is to fix the situation fast, so the economy and people can recover. Don't drag it out.
Last edited by Camlon; 05-06-12 at 06:46 PM.
Reality is, they won their price for influencing people, they did not win the price for being good economists. In fact they are both terrible economists, because their agenda prevents them from doing proper research. Secondly, just because you are an economist, does not mean you are correct. Or else, the crisis wouldn't have occoured. A crisis Krugman thought would be a slowdown. He also predicted it to happen in 2006 and kept revising.
To cite Krugman is like citing Bill Maher or Bill O'reilly. That may work on Fox News or Democratic Underground, but not here.
Really, what about Japan? They did exactly that, they just kept spending and their economy never recovered. Because of the spending, bad debt was never liquidated. And because of the spending, then their public debt went out of control. Also, Ireland and Iceland didn't do badly. What about Latvia? They had a fall of 18% of GDP over one year, current account deficit was at 20%. Unemployment rose to 20%. Now, they have a 6% growth, positive balance sheet, positive current account and an unemployment of 14%.Greece cooked their books, which is why their problem is by far the worst. But austerity has stalled out their economy entirely. The same thing is happening in Spain, which is the Eurozone's third biggest economy and could be a MASSIVE problem for the world economy if they collapse. The only way out of recession is spending.
There needs to be a balance, and we need to look at other factors such as confidence. If you keep lying like Greece and the EU did, then who knows what will happen tomorrow. Two really bad years is better than a miserable decade. It also gives the economy the possibility to recover and rebalance.
Dumbest article I have ever read. It pretty much goes like this, Uh... US got a lower bond yield than Portugal, and the same as UK, and did no austerity. That means austerity is bad. Why do you cite it? It makes you look dumb.History and present conditions prove that austerity is a failure during a recession.
Austerity's Greatest Failure - Matthew O'Brien - Business - The Atlantic
Also, UK did not do much austerity. Then they wouldn't have got an inflation rate of 5%. That is one of the things Friedman proved. That high inflation was caused by the government inflating the money supply, which is the opposite of austerity.
The austerity didn't bring it to 168% of GDP. The crisis did.“It took 30 years of frivolous public spending to bring the country to a debt-to-GDP ratio of 120%. Two years of severe austerity brought debt to 168% of GDP. Obviously the medicine didn’t work.”
(from this article)
I must say your evidence is pretty terrible. Even I can make better arguments than that for your point.There's ample evidence that austerity is a failure as a policy.
I can tell you what does not work. Having an outside country telling a country what to do, and essentially removing your democracy. Because guess which country is going to be blamed, if it goes haywire? Also, imposed austerity is much tougher to accept. EU shouldn't have tried to control Greece, let the Greeks find out where they want to cut.
Last edited by Camlon; 05-06-12 at 07:39 PM.
In the early very late 70's and early '80's, one of the big anchors on the economy was inflation. Reagan took over one heck of a mess, where a big part of the solution meant a continued shrinking of the money supply, working with Volker. A perfect example of staying the course with a remedy that made things tough in the short term, but was the only way to fix things long term. We endured unemployment of about 10.8% in Reagan's second year, as the foundation was mended, and still trusted his leadership. "Stay the Course" was the motto for the '82 midterms, and Reagan did very well all things considered. And in '84 he won like 525 electoral votes. Obama sure ain't doing that this year. He's out on his ass if enough folks wake up.
As noted, Reagan not only oozed confidence and leadership, but he also made the tough decisions that warranted that loyalty.
Not Obama. Obama is like a piss-ant. He is an imposter in the arena of leadership. A joke. An incompetent.
"And in the end, we were all just humans, drunk on the idea that love, only love, could heal our brokenness."
"If I take death into my life, acknowledge it, and face it squarely, I will free myself from the anxiety of death and the pettiness of life - and only then will I be free to become myself." ~ Martin Heidegger
Nice to see a conservative acknowledge that cutting government spending will lead to "deeper recessions"Reduction of government spending will of course lead to deeper recessions, but sometimes it is neccecary. Its not like it will never work. As I have pointed out, Ireland was probably in the worst situation, and they are doing ok now. Also, Iceland cut massively over one year. Their GDP dropped massively. But after a year or two it got better. The much better way is to fix the situation fast, so the economy and people can recover. Don't drag it out.
"It's not like it will never work"? Really - could the commenter provide an example where it did work?
Iceland shut down its three major banks and then told the creditors - "too bad, you ain't gettin' paid". Non-Icelanders who had deposited money in the closed banks were told - "Eh too bad." The value of the Iceland krona crashed on the international market, which then caused the price of imports to skyrocket but it made Iceland a much cheaper place to visit, which brought in money to the nation's economy.
As there are only about 330,000 Icelanders, trying to compare the US economy with its 320,000,000 population, does seem to be a bit off.
Now, think about the difference in the amount of offshore money that is in US banks and the amount that was in Icelandic banks - Do you honestly think that if US banks told those depositors - "Eh, too bad, you lost it" - that there would not be serious repercussions, repercussions that would affect the world's economy?
Ireland: from the Irish Times
Tax take for April down on same month last year
TAX REVENUES in April were 1.3 per cent down on the same month last year at €2.08 billion, according to Department of Finance figures. This, however, was slightly better than expected on budget day.Government lowers official expectations for growth
THE GOVERNMENT yesterday lowered its expectations for economic activity and employment in 2012 in its first economic forecast since December’s budget.
“And I have no doubt that every new example will succeed, as every past one has done, in shewing that religion & Govt will both exist in greater purity, the less they are mixed together.”
~ James Madison, letter to Edward Livingston, July 10, 1822