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Thread: Thousands Protest Austerity Measures in Spain and Portugal

  1. #11
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    Re: Thousands Protest Austerity Measures in Spain and Portugal

    Quote Originally Posted by PeteEU View Post
    Wrong..

    Austerity during a recession or bad economic growth will not fix the economy.. but only make it worse.

    Austerity during growth in the private sector and over all economic growth... the right way to do things.
    If you try to cure this crisis by trying to pay back the debt all at the same time it shrinks the economy, when you shrink the economy drastically you reduce the amount of tax revenue you can collect, which means you reduce the amount of debt you can pay back.


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    Re: Thousands Protest Austerity Measures in Spain and Portugal

    Quote Originally Posted by iliveonramen View Post
    Actually what's interesting is Spain ran 5 years of budget surpluses before the financial disaster. Now people are shaking their finger at Spain and saying "you crazy Spaniards need to live in your means!".
    Yea and their debt load just hit 80%.... which aint that high relative to other nations.

    Problem in Spain is not overspending but the construction sector melt down.. it was accounting for 30% of the economy and over night that poofed and with it a massive amount of tax revenue. For example in my area of Spain, the VAT tax revenue dropped 51% from 2007 to 2011 and we are a big tourist area and there has actually been steady growth in that industry.

    Now I aint saying Spain did not have its problems despite the boom.. after all it was a bubble, and they did not address it despite knowing it was there.. much like the sub-prime disaster in the US.. but they also did not attempt to fix the structural problems in the country that everyone knew were there. Now they are being forced to do the changes and cut heavily in public spending.. which on a relative scale is and was not that high compared to many other countries... and that of course hurts a lot in an economic meltdown.
    PeteEU

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    Re: Thousands Protest Austerity Measures in Spain and Portugal

    Quote Originally Posted by TheDemSocialist View Post
    If you try to cure this crisis by trying to pay back the debt all at the same time it shrinks the economy, when you shrink the economy drastically you reduce the amount of tax revenue you can collect, which means you reduce the amount of debt you can pay back.
    I agree, but more importantly, cutting spending in the public sector, while the private sector is also contracting.. is suicide. We saw this at the start of the big depression... hell it basically caused the great depression in many ways.
    PeteEU

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    Re: Thousands Protest Austerity Measures in Spain and Portugal

    *sigh*

    In short, the main probelm is that Spanish banks are bancrupting the country. Which is entirely the responsability of Spain.

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    Re: Thousands Protest Austerity Measures in Spain and Portugal

    Quote Originally Posted by PeteEU View Post
    I agree, but more importantly, cutting spending in the public sector, while the private sector is also contracting.. is suicide. We saw this at the start of the big depression... hell it basically caused the great depression in many ways.
    I agree some cuts to public need (im guessing we differ on the degree of cuts that need to be made) the degree on the cuts to be made but austerity is not the way to fix this. As economists Mark Blyth stated that "All of the countries that have [gone] on austerity programs over the last two years — they now have more debt rather than less," Voters, Economists Agree: Austerity Not The Answer : NPR


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    Re: Thousands Protest Austerity Measures in Spain and Portugal

    Quote Originally Posted by samsmart View Post
    I think it's an option.

    I mean a lot of investors want the people to pay off the debt borrowed by these European governments. But those investors need to remember that all loans have a level if risk to them.

    And with a default of that debt, the people won't have to pay back the principle or the rates. That way the people will have more money to spend on developing their economy rather than pay back government debt.

    And one of the outrages by the European public, as I understand it, is that the pressure for austerity rather than default is being pushed by global banks - who were the ones who lent that money and want it paid back because they didn't do their homework on these loans.

    So why should the people if Europe pay for the folly of global banks?
    That's just kind of a sophomoric view that makes the phrase "penny wise, pound foolish" a colossal understatement.

    Spain and Portugal, like the rest of the industrialized world, rely on outside investment. Both are already having a difficult enough time finding people to buy their bonds. Defaulting would practically guarantee a stop to all the money coming into these two countries and the government just wouldn't have enough to pay for essential services, pensions, or anything else.

    Unfortunately, this really is just the end result of socialism.

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    Re: Thousands Protest Austerity Measures in Spain and Portugal

    Quote Originally Posted by PeteEU View Post
    Wrong..

    Austerity during a recession or bad economic growth will not fix the economy.. but only make it worse.

    Austerity during growth in the private sector and over all economic growth... the right way to do things.
    It's not a matter of fixing European economies though.

    It's a matter of keeping them solvent long enough so they can be fixed when the global economy picks up again.

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    Re: Thousands Protest Austerity Measures in Spain and Portugal

    Quote Originally Posted by Donahue View Post
    That's just kind of a sophomoric view that makes the phrase "penny wise, pound foolish" a colossal understatement.

    Spain and Portugal, like the rest of the industrialized world, rely on outside investment. Both are already having a difficult enough time finding people to buy their bonds. Defaulting would practically guarantee a stop to all the money coming into these two countries and the government just wouldn't have enough to pay for essential services, pensions, or anything else.

    Unfortunately, this really is just the end result of socialism.
    Iceland decided to do it.

    And socialism doesn't have anything to do with this. Rather, it's corruption of government officials. Which are two separate issues.

    I think if these European countries were to default on their loans and then implement anti-corruption reforms, outside investors would be more willing to loan them money in later years.
    Also, we need to legalize recreational drugs and prostitution.

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    Re: Thousands Protest Austerity Measures in Spain and Portugal

    Quote Originally Posted by samsmart View Post
    I think it's an option.

    I mean a lot of investors want the people to pay off the debt borrowed by these European governments. But those investors need to remember that all loans have a level if risk to them.

    And with a default of that debt, the people won't have to pay back the principle or the rates. That way the people will have more money to spend on developing their economy rather than pay back government debt.

    And one of the outrages by the European public, as I understand it, is that the pressure for austerity rather than default is being pushed by global banks - who were the ones who lent that money and want it paid back because they didn't do their homework on these loans.

    So why should the people if Europe pay for the folly of global banks?
    Because people who borrow money have a contractual obligation to pay it back.
    You're basically saying it's ok to strategically default, because they can.

    Pretty cruddy morals there.
    I was discovering that life just simply isn't fair and bask in the unsung glory of knowing that each obstacle overcome along the way only adds to the satisfaction in the end. Nothing great, after all, was ever accomplished by anyone sulking in his or her misery.
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    Re: Thousands Protest Austerity Measures in Spain and Portugal

    Quote Originally Posted by samsmart View Post
    Iceland decided to do it.

    And socialism doesn't have anything to do with this. Rather, it's corruption of government officials. Which are two separate issues.

    I think if these European countries were to default on their loans and then implement anti-corruption reforms, outside investors would be more willing to loan them money in later years.
    Why would anyone want to loan them money, when someone can rationalize defaulting again, using corruption or some other excuse?
    I was discovering that life just simply isn't fair and bask in the unsung glory of knowing that each obstacle overcome along the way only adds to the satisfaction in the end. Nothing great, after all, was ever accomplished by anyone sulking in his or her misery.
    —Adam Shepard

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