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Thread: Krugman Wishes He Were Wrong Amid EU Austerity Backlash

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    Krugman Wishes He Were Wrong Amid EU Austerity Backlash

    After 2-3 years of "austerity" programs, Europeans are starting to look at their economies in a different manner.

    Krugman Wishes He Were Wrong Amid EU Austerity Backlash

    Europe’s shifting emphasis from enforcing austerity to seeking economic growth marks a hollow victory for Nobel laureate Paul Krugman.

    “I wish I’d been wrong for the sake of the world,” Krugman said in an interview with Bloomberg Television’s Carol Massar. “You can see that there has been a definite shift in opinion.”

    The euro area’s push to revive confidence in its economy and financial markets by attacking budget deficits will be challenged at the ballot boxes of France and Greece on May 6 as the region’s economy skids toward its second recession in three years and unemployment nears 11 percent.
    'Somehow', in some mysterious fashion, the "failed" stimulus programs advocated and pushed for by the Administration have kept the US from falling back into recession. Now that the stimulus funding has ended, we are starting to see the economy here beginning to slow. Naturally those of the Austrian school think that this proves their point that government should spend even less.
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    Re: Krugman Wishes He Were Wrong Amid EU Austerity Backlash

    Right -- as the European countries that concentrated on spending cuts fall like dominoes back into recession.
    "The necessaries of life occasion the great expense of the poor. They find it difficult to get food, and the greater part of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal expense of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess. ... It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion."

    -- Adam Smith

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    Re: Krugman Wishes He Were Wrong Amid EU Austerity Backlash

    I may be wrong.

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    Re: Krugman Wishes He Were Wrong Amid EU Austerity Backlash

    Quote Originally Posted by Somerville View Post
    After 2-3 years of "austerity" programs, Europeans are starting to look at their economies in a different manner.



    'Somehow', in some mysterious fashion, the "failed" stimulus programs advocated and pushed for by the Administration have kept the US from falling back into recession. Now that the stimulus funding has ended, we are starting to see the economy here beginning to slow. Naturally those of the Austrian school think that this proves their point that government should spend even less.
    And the money to continue Europes deficit spending was going to come from where? Krugman? Are you willing to lend Greece more money? I didnt think so. Yet you want the money magically appear from....somewhere.

    As for the US, your post simply highlights the ultimate failure of Obamas policies. We now have an economy that is addicted to stimulus. And like any addict, the US is now experiencing withdrawl as the latest fix wears off. Whats your solution? Another fix, then another and another after that. Deficit spending is simply borrowing from the future. For Europe, that future has arrived and it isnt very promising. For the US, borrowing can only lead to austerity or inflation. People really need to stop pretending that our current policy is without consequence.

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    Re: Krugman Wishes He Were Wrong Amid EU Austerity Backlash

    Come on guys...lets get honest...No one is more against corporate pigs at the trough that lpast...but lets be fair and honest.

    We need an Austerity program...we need "REASONABLE" entitlement reform...and we need the rich to "ACTUALLY" pay something near what they should have been all along and have not.

    What we have instead of "REASON" is this assinine Teaparty far right group of rich brats that think they are entitled to EVERYTHING now instead of most and that they are going to take whats left from a "SMALL" middle class they created out of greed...running to china.
    Corporations put all these americans out of work and not paying taxs all on thier OWN....Id bet if you count the unemployed that total number would pale compared to how many job have been created in china since the first one....THE TEAPARTY and the super conservatives on here refuse to acknowledge that.
    If they wont do all 3 reasonably...Austerity, Entitlement Reform and Rich pay a fair share....then im voting for Whoever says anything I want to hear thats just good for me....like everyone else

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    Re: Krugman Wishes He Were Wrong Amid EU Austerity Backlash

    Several quick points:

    1. This outcome reaffirms mainstream economic principles: In the short-run, increased government spending is stimulative; in the short-run cuts in government spending place a drag on the economy.

    2. In the long-term, all nations, including the U.S., have a threshold of debt intolerance.

    3. Addressing debt-related challenges is optimally carried out in a gradual fiscal consolidation program and ideally undertaken when the economy is growing. The U.S. is in this position. Germany is in this position. Germany is undertaking fiscal consolidation, though an aggressive one. The U.S. is not undertaking meaningful fiscal consolidation.

    4. Waiting until a debt crisis is imminent or underway requires far more painful austerity. Then, a reasonable timeframe for a transition is no longer available. Austerity is far more drastic than the gradual fiscal consolidation program and the luxury of waiting until the economy is growing to launch such a program does not exist. Greece fell into this situation.

    5. In democratic countries, austerity can prove unsustainable if it doesn't quickly achieve desired outcomes. Over time, the public can use the ballot box to choose governments that abandon the path of austerity. Today's elections in Greece increase prospects that a new less austerity-friendly Greek government could gain power. France will also likely see a new government that favors greater fiscal accommodation than the current one headed by President Sarkozy.
    Last edited by donsutherland1; 05-06-12 at 02:42 PM.

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    Re: Krugman Wishes He Were Wrong Amid EU Austerity Backlash

    Quote Originally Posted by Fletch View Post
    And the money to continue Europes deficit spending was going to come from where? Krugman? Are you willing to lend Greece more money? I didnt think so. Yet you want the money magically appear from....somewhere.
    It was going to have to come from the EU central bank, which could fund it via bonds...just like we do. Since Greece is on the Euro, they could not raise the funding themselves.

    As for the US, your post simply highlights the ultimate failure of Obamas policies. We now have an economy that is addicted to stimulus. And like any addict, the US is now experiencing withdrawl as the latest fix wears off. Whats your solution? Another fix, then another and another after that. Deficit spending is simply borrowing from the future.
    No, our economy is not an addict, it was a heart attack victim. The stimulus was a shock to keep the heart beating, but the rest of the care needed has been lacking, and we might be getting sick again, the first treatment did not get enough or keep enough employed.


    For Europe, that future has arrived and it isnt very promising. For the US, borrowing can only lead to austerity or inflation. People really need to stop pretending that our current policy is without consequence.
    LOL...yeah, about that inflation....it isn't happening...and borrowing leads to austerity? No, borrowing leads to repayment in the future, where mild inflation causes the past borrowing to decrease in amount on top of the fact that borrowing now has less that zero interests costs.
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    Re: Krugman Wishes He Were Wrong Amid EU Austerity Backlash

    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.

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    Re: Krugman Wishes He Were Wrong Amid EU Austerity Backlash

    Quote Originally Posted by Gimmesometruth View Post
    It was going to have to come from the EU central bank, which could fund it via bonds...just like we do. Since Greece is on the Euro, they could not raise the funding themselves.
    Why should the rest of the EU pay for letting Greece stay afloat? But it was never going to happen, because Greece was supposed to not default. It is also against EU laws.

    LOL...yeah, about that inflation....it isn't happening...and borrowing leads to austerity? No, borrowing leads to repayment in the future, where mild inflation causes the past borrowing to decrease in amount on top of the fact that borrowing now has less that zero interests costs.
    It doesn't work that way, because cutting after a recession is even harder, because you are not forced to. Just look at Japan. Hence, the country will keep running deficits till next crisis. During the next crisis, no one is going to lend you money, and that is when you become like Greece. Instead of doing mild cuts, then you have to do massive cuts over a very short timespan, and the economy collapses.

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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.
    Where are you getting that Ireland is "doing well"? By what measure?

    Ireland Triumphs!
    Or, maybe not.

    There’s a visible push to claim that recent Irish experience — somewhat better-than-expected growth in the second quarter, rising exports — vindicates austerity policies. Here’s a new piece on export growth, trumpeting a rise in pharma exports.

    So, some cold water. First of all, eventual recovery after years of Depression-level unemployment is a strange definition of success. But there’s also a specifically Irish twist. Pharma accounts for a large share of Irish exports — but it makes a much smaller contribution to the Irish economy. Partly that’s because pharma uses a lot of imported inputs, so that it has relatively low domestic content. Partly that’s because pharma is very capital-intensive, employing very few people — and the capital is foreign owned, so that the contribution to Gross National Product, which deducts income paid to foreigners, is smaller than the contribution to Gross Domestic Product, which doesn’t. Indeed, Ireland is one of those countries where you really want to track GNP rather than GDP to get a sense of how the country is doing.

    And here’s how it’s doing:

    093011krugman1-blog480.jpghttp://krugman.blogs.nytimes.com/2011/09/30/ireland-triumphs/

    Quote Originally Posted by Cam
    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 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).

    Quote Originally Posted by Cam
    The problems in EU is due to lack of trust, and setting wrong expectations. It is not due to austerity.
    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.
    Last edited by Gimmesometruth; 05-06-12 at 03:45 PM.
    Quote Originally Posted by trouble13 View Post
    If you wanna know why Trumpsters are ignoring you its for the same reason you ignored the KKKs complaints about Obama.
    Quote Originally Posted by Moderate Right View Post
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    Quote Originally Posted by Bodhisattva View Post
    He didn't say it didn't make sense. He said it is complete nonsense.

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