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Thread: Krugman Wishes He Were Wrong Amid EU Austerity Backlash

  1. #41
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    Re: Krugman Wishes He Were Wrong Amid EU Austerity Backlash

    Quote Originally Posted by Camlon View Post
    Ok, relatively they did better. Look at your own chart, their GDP is increasing. It is not in freefall like other European countries. They are also ahead of schedule in their austerity.
    Let me update you and the chart.......the chart is tracking GNP, not gdp, and the result for the 4th quarter of 2011: -2.2%.



    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.
    .....or Spain...but wait, Spain didn't have the big deficits going into the crash, and they got hit by the housing crash just like Ireland and the US and the UK.....I guess everyone was "irresponsible".


    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.
    No, you misunderstand, the idea that "confidence" will overcome the natural tendency for consumers to pull back in hard times is a fairy tale. Consumers can't, their wealth has been severely cut down, income is down, job loss is high.....DEMAND is down. "Confidence" will not overcome these realities.

    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.
    Ireland is not going the Iceland route, they can't....apples and oranges. And Iceland did not go into the same levels of govt cut backs, they kept social spending up and it is paying off. As I showed above, Ireland had a lower fourth quarter in 2011.

    Now, austerity, as a means to lower debt via govt cuts in spending can work....WHEN AN ECONOMY IS NEAR FULL STEAM.....but if it is already experiencing lower private demand, removing govt spending makes the recovery longer and slower. That is not "neccecary" at all.

    Edit to add: The vote on austerity came in last night in France, you lost.
    Last edited by Gimmesometruth; 05-07-12 at 12:06 PM.
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    Re: Krugman Wishes He Were Wrong Amid EU Austerity Backlash

    Quote Originally Posted by AdamT View Post
    Right -- as the European countries that concentrated on spending cuts fall like dominoes back into recession.
    You can only ignore reality for so long, until it comes back to prove you're wrong, by exacting a brutal lesson. Europe and the US will eventually have to pay the piper for our folly.
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    Re: Krugman Wishes He Were Wrong Amid EU Austerity Backlash

    Quote Originally Posted by Gimmesometruth View Post
    .....or Spain...but wait, Spain didn't have the big deficits going into the crash, and they got hit by the housing crash just like Ireland and the US and the UK.....I guess everyone was "irresponsible".
    They actually had a surplus... just pointing that out..
    PeteEU

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    Re: Krugman Wishes He Were Wrong Amid EU Austerity Backlash

    Quote Originally Posted by Camlon View Post
    Krugman is a liar. I still don't understand why people use him as a reference, especially here. This is not Democratic Underground.

    Actually, Greece didn't do any austerity before they run out of money in 2010. They would love to keep going, but who are going to lend them. Even with plenty of money, Greece would just muddle through and there would be no hope of them paying back. However, Germany has implemented a pretty tough austerity program, and they are not doing badly at all. Ireland was in a much worse situation than Greece, they had a very tough austerity program, and they are doing well.

    There is no connection. The problem is, Greece is like a drug addict. They are addicted on credit. They don't want to reform, and corruption and tax evasion is widespread. EU officals told us first there was no problem in Greece, then that a bailout will solve all problems, then a second bailout, but they won't default, then they defaulted, but pretended it wasn't a default. In return Greece were supposed to do reforms they had no interest in doing. The expectations were way off, and the market is terrified of Greece right now. Would you put money in a Greek bank? Would you lend them money? Would you start up a business? There is no trust. If the EU hadn't sugar-coated the situation, and let Greece find solutions to their problems on their own, then Greece would probably be out of the recession right now.

    The problems in EU is due to lack of trust, and setting wrong expectations. It is not due to austerity.
    Ireland is doing well?

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    Re: Krugman Wishes He Were Wrong Amid EU Austerity Backlash

    Quote Originally Posted by lizzie View Post
    You can only ignore reality for so long, until it comes back to prove you're wrong, by exacting a brutal lesson. Europe and the US will eventually have to pay the piper for our folly.
    Of course you do...but paying the piper doesn't need to be a drastic process in the middle of decreased global demand for goods.
    “Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone.” John Maynard Keynes

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    Re: Krugman Wishes He Were Wrong Amid EU Austerity Backlash

    I just don't understand where the money is coming from for these countries to borrow it. Where is the money suppose to come from? The national lending wells are drying up.
    We went from sticks and stones may break my bones but words will never hurt me to safe spaces.

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    Re: Krugman Wishes He Were Wrong Amid EU Austerity Backlash

    Quote Originally Posted by lizzie View Post
    You can only ignore reality for so long, until it comes back to prove you're wrong, by exacting a brutal lesson. Europe and the US will eventually have to pay the piper for our folly.
    Who is "our", what is the "folly"?

    If "our" is the US, you fail to see that all of the EU, Australia and even China had seen a run-up in real estate prices, it was truly a world wide bubble.

    If by "folly" you mean the world wide bubble, then what is the solution, a more restrictive set of lending requirements, ala Canada?
    Last edited by Gimmesometruth; 05-07-12 at 12:46 PM.
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    Re: Krugman Wishes He Were Wrong Amid EU Austerity Backlash

    Quote Originally Posted by Blue_State View Post
    I just don't understand where the money is coming from for these countries to borrow it. Where is the money suppose to come from?
    It's usually in the form of bonds. The countries sell bonds promising a certain percentage of return. For countries like Greece they have ridiculously high interest rates on the bonds, because nobody wants to buy them and they have horrible credit.

    Most of it comes from private banks, investors, and other nations like China. A lot of the loans come from the ECB (European Central Bank), which is paid for and subsidized by the EU member states' taxpayers. China is buying up a massive portion of our and the EU's debt. It's getting really bad.
    Last edited by RabidAlpaca; 05-07-12 at 12:47 PM.
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    Re: Krugman Wishes He Were Wrong Amid EU Austerity Backlash

    Quote Originally Posted by RabidAlpaca View Post
    It's usually in the form of bonds. The countries sell bonds promising a certain percentage of return. For countries like Greece they have ridiculously high interest rates on the bonds, because nobody wants to buy them and they have horrible credit.

    Most of it comes from private banks, investors, and other nations like China. A lot of the loans come from the ECB (European Central Bank), which is paid for and subsidized by the EU member states' taxpayers. China is buying up a massive portion of our and the EU's debt. It's getting really bad.
    I get where it comes from, but I was under the impression that these sources are drying up. Or is that not correct?
    We went from sticks and stones may break my bones but words will never hurt me to safe spaces.

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    Re: Krugman Wishes He Were Wrong Amid EU Austerity Backlash

    Quote Originally Posted by Blue_State View Post
    I get where it comes from, but I was under the impression that these sources are drying up. Or is that not correct?
    It's definitely bankrupting everybody, which is why everyone's affected in the recession. When they run out of legitimate funds they step in and just print more money to pay for it, which is TOTALLY an awesome idea.
    Quote Originally Posted by LowDown View Post
    I've got to say that it is shadenfreudalicious to see the rich and famous fucquewads on the coast suffering from the fires.

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