He did not win the Nobel Prize for nothing

[DRSB]

And yet:

"Portugal’s government has just fallen in a dispute over austerity proposals. Irish bond yields have topped 10 percent for the first time. And the British government has just marked its economic forecast down and its deficit forecast up.

What do these events have in common? They’re all evidence that slashing spending in the face of high unemployment is a mistake. Austerity advocates predicted that spending cuts would bring quick dividends in the form of rising confidence, and that there would be few, if any, adverse effects on growth and jobs; but they were wrong.

It’s too bad, then, that these days you’re not considered serious in Washington unless you profess allegiance to the same doctrine that’s failing so dismally in Europe."

True or false?
Full article here: http://www.nytimes.com/2011/03/25/opini ... an.html?hp

[Coito ergo sum]

I believe that's false. I would say that the dispute in Portugal over austerity PROPOSALS could not be evidence that slashing spending in the face of high unemployment is a mistake. Moreover, the Irish bond yields are not directly related to cuts in Irish spending, but are a function of a much larger economic issue going on in Ireland that predate any recent austerity measures there. And, in Britain the economic decline wasn't caused by the austerity measures, and the mere fact that the austerity measures haven't reversed the tide in a year is not "evidence that slashing spending in the face of high unemployment is a mistake."

Krugman states:

It was not always thus. Two years ago, faced with soaring unemployment and large budget deficits — both the consequences of a severe financial crisis — most advanced-country leaders seemingly understood that the problems had to be tackled in sequence, with an immediate focus on creating jobs combined with a long-run strategy of deficit reduction.

...and, it didn't work. Jobs were not created and no deficit reduction was achieved.

Krugman goes on to ask

But couldn’t America still end up like Greece? Yes, of course. If investors decide that we’re a banana republic whose politicians can’t or won’t come to grips with long-term problems, they will indeed stop buying our debt.

And, if our politicians keep spending at breakneck speed and increasing spending, and throwing wads of money willy-nilly on wasteful, inefficient and useless boondoggles - as in the 2/09 "Stimulus Package" which was rife with fraud and theft - rife with inept management of the money causing huge losses - and rife with wasteful programs like "turtle crossings" and renovations of local, largely unused airports honoring Senators - and other pork-barrel projects - then investors will see that politicians are not willing to tackle the long term problems.

Krugman then said, "Just ask the Irish, whose government — having taken on an unsustainable debt burden by trying to bail out runaway banks — tried to reassure markets by imposing savage austerity measures on ordinary citizens. " Yes - which is where the big mistakes took place. We allowed the market to become run by too small of a group of banks - the antitrust and anti-monopoly laws should have been used to block that trend in the first place, that way banks and financial institutions would not have gotten to the point of being called "too big to fail" and we should have let the fuckers go right out of business, and then other companies and new companies could have come in filled the void. The problem was the initial bailout of these entities. We took government money (taxpayer money) and added to it borrowed money or just fiat printed money and paid to prop up failed banks and financial institutions - rather than aggressively audit their books to find the inevitable fraud and securities law violations that we would find in there - the government helped cover it up by covering the debt of these failed institutions. What should have happened is they should have gone bankrupt, and the bankruptcy trustee should have investigated serious claims of fraud, and audited the company from top to bottom. The fuckers at the big financial houses that got bailed out would have gone to jail - at least some of them would have.

And, now the taxpayers are left holding the bag.

What Krugman is not acknowledging is that at some point whether you want to keep spending or not, there is no more money to spend and no more capital to leverage. We can only print money. And, that's the point we've reached. We are in the stage of "quantitative easing" - QE-1 and QE-2 - here in the United States. What that means is that we are printing about a trillion dollars in currency backed by nothing, and flooding the economy with it, and at the same time issuing treasury bonds against that money. The result is inflation, which will divest us poor saps of the rest of our lifes' savings because of the reduction in value of every dollar.

I am four square in favor of austerity measures, if by that it is meant cutting government spending starting with the pork-barrell and wasteful spending and moving inward to limit government spending to the necessary. Spending qua spending is not a virtue. Spending is good if what is being purchased is needed.

You want people to have jobs - teach him to fish and stop taxing the fuck out of fish, and stop making him pay a fee to the government for the privilege of owning a fishing boat. Make it easier for him to fish or at a minimum stay out of his way.

[Elderito]

True,

Sadly the worst thing about the stimulus package of 2009 was that it was to small. When it was being debated i told my teenage sons that an economic stimulus needs to be sufficient to push economic growth and that if the stimulus was to small it would be a bit like a snowboarder trying to do a back flip without getting enough air. The next few months seemed promising and I began to feel that Pres. Obama had estimated correctly and that my guess that it needed to be about triple its size (the stimulus) was wrong. It is of course a balancing act between inflation and growth. Now i think I was correct and Obama was mistaken.

Running a deficit only harms the economy if the debt incurred by the government is taking capital away from private investment, but in today's economy that is not the case. The government should be concentrating on increasing employment, thus increasing consumer confidence, leading to economic investment in the private sector. As unemployment goes down then government spending should go down so that deficits do not get in the way of private investment. We are not there yet.

Just like in the 1930's when government leaders did not have the will to spend enough to stimulate the economy we are caught in a political quagmire. Saddest because so much of politics has nothing to do with the benefit of the country just the arguments of political sophists. World War II of course threw caution to the wind, employed everyone, and only prevented inflation through rationing but it did spend us out of depression. How much better would it be to spend our way out of depression by repairing infrastructure, creating green energy sources, educating our youth, protecting the environment, and helping the poor.

[egbert]

No? Well then who did?

[egbert]

And, if our politicians keep spending at breakneck speed and increasing spending, and throwing wads of money willy-nilly on wasteful, inefficient and useless boondoggles - as in the 2/09 "Stimulus Package" which was rife with fraud and theft - rife with inept management of the money causing huge losses - and rife with wasteful programs like "turtle crossings" and renovations of local, largely unused airports honoring Senators - and other pork-barrel projects -

No, no, no - it's the goddamn Unions, remember? Greedy Unions, even Roosevelt and Glenn Beck say so.

[egbert]

You want people to have jobs - teach him to fish and stop taxing the fuck out of fish, and stop making him pay a fee to the government for the privilege of owning a fishing boat. Make it easier for him to fish or at a minimum stay out of his way.

What the F is he gonna fish? The individuals entrusted with protecting the fisheries have allowed fish stocks to be depleted beyond recovery, and what little is left so polluted by industrial giants that one has to run health risks even in limited consumption.
The rich and greedy have skimmed off most of the wealth, and now it's time to punish the ignorant masses for letting it happen.
Let's hope the mideast riots spread worldwide - it's high time for a reckoning!

[Atheist-Lite]

Energy = Economic Growth. I think a supergrid of supercooled electricity lines across the US is what needs to be built. This will providez high-calibre work at all levels of the social spectrum and will provide the power for the 3d printing consumer revolution that is the next big thing sometime soon.

[egbert]

Energy = Economic Growth. I think a supergrid of supercooled electricity lines across the US is what needs to be built. This will providez high-calibre work at all levels of the social spectrum and will provide the power for the 3d printing consumer revolution that is the next big thing sometime soon.

According to our experts, the future in Canada lies in the service economy. And, what country wouldn't prosper when we're all happily cutting each other's hair, mowing each other's lawns. What a great untapped source of wealth!

[DRSB]

Energy = Economic Growth. I think a supergrid of supercooled electricity lines across the US is what needs to be built. This will providez high-calibre work at all levels of the social spectrum and will provide the power for the 3d printing consumer revolution that is the next big thing sometime soon.

According to our experts, the future in Canada lies in the service economy. And, what country wouldn't prosper when we're all happily cutting each other's hair, mowing each other's lawns. What a great untapped source of wealth!

[Coito ergo sum]

And, if our politicians keep spending at breakneck speed and increasing spending, and throwing wads of money willy-nilly on wasteful, inefficient and useless boondoggles - as in the 2/09 "Stimulus Package" which was rife with fraud and theft - rife with inept management of the money causing huge losses - and rife with wasteful programs like "turtle crossings" and renovations of local, largely unused airports honoring Senators - and other pork-barrel projects -

No, no, no - it's the goddamn Unions, remember? Greedy Unions, even Roosevelt and Glenn Beck say so.

I never called them greedy, and I never suggested they were the cause of America's problems. You, of course, think that anything other than unqualified, unquestioning allegiance to anything and everything any union, or person associated with a union, says is unacceptable. "My union right or wrong - you don't like it, you can leave" right?

[Coito ergo sum]

You want people to have jobs - teach him to fish and stop taxing the fuck out of fish, and stop making him pay a fee to the government for the privilege of owning a fishing boat. Make it easier for him to fish or at a minimum stay out of his way.

What the F is he gonna fish? The individuals entrusted with protecting the fisheries have allowed fish stocks to be depleted beyond recovery, and what little is left so polluted by industrial giants that one has to run health risks even in limited consumption.

One, it was a metaphor, and two, you're wrong. Take the Great Lakes, for example. They are far cleaner today than they were 30 and 40 years ago.

And, if you are right that the fisheries are "depleted beyond recovery" then I guess the EPA and 50 state environmental protection agencies haven't done a damn thing.

[Coito ergo sum]

Energy = Economic Growth. I think a supergrid of supercooled electricity lines across the US is what needs to be built. This will providez high-calibre work at all levels of the social spectrum and will provide the power for the 3d printing consumer revolution that is the next big thing sometime soon.

According to our experts, the future in Canada lies in the service economy. And, what country wouldn't prosper when we're all happily cutting each other's hair, mowing each other's lawns. What a great untapped source of wealth!

What do you want them to do? Manufacture? Mine? Drill? Refine? All those nasty, evil industries are what has already destroyed the world beyond redemption. Energy? That's would just be encouraging our evil, unsustainable western civilization. What we need is less energy, so that people will live greener, more local, and more more sustainable individual lifestyles - small family farms, fertilized with renewable human-sourced fertilizer.

[AnInconvenientScotsman]

[...]in Britain the economic decline wasn't caused by the austerity measures, and the mere fact that the austerity measures haven't reversed the tide in a year is not "evidence that slashing spending in the face of high unemployment is a mistake."

Before the 'Austerity Budget' came into effect, growth was climbing; unemployment was falling and we were still managing to reduce the deficit. Since Gideon's measures took effect we've seen unemployment (especially youth unemployment) shoot up, particularly in the areas where jobs are most needed, in the inner cities; we've seen the cost of living increase due to a VAT rise (amongst other regressive tax increases) and the economy has shrunk (at the end of last year) with it forecast to grow at a snail's pace in future. Not to mention the debt that many of Britain's future workforce will be saddled with: students taking £9,000/year courses in England could wind up effectively paying for £18,000/year courses due to interest.

Fuck austerity

[Coito ergo sum]

[...]in Britain the economic decline wasn't caused by the austerity measures, and the mere fact that the austerity measures haven't reversed the tide in a year is not "evidence that slashing spending in the face of high unemployment is a mistake."

Before the 'Austerity Budget' came into effect, growth was climbing; unemployment was falling and we were still managing to reduce the deficit.

I'd like to see the numbers - when was "growth climbing, unemployment falling and the deficit going down"? May, 2010? 2009?

Since Gideon's measures took effect we've seen unemployment (especially youth unemployment) shoot up, particularly in the areas where jobs are most needed, in the inner cities; we've seen the cost of living increase due to a VAT rise (amongst other regressive tax increases) and the economy has shrunk (at the end of last year) with it forecast to grow at a snail's pace in future. Not to mention the debt that many of Britain's future workforce will be saddled with: students taking £9,000/year courses in England could wind up effectively paying for £18,000/year courses due to interest.

Fuck austerity

Let's see the numbers - before/after.

[AnInconvenientScotsman]

As you can see, growth peaked in 2010 Q2, before Osborne's austerity budget, before GDP shrank by 0.6% in Q4 [Office for National Statistics, 2011]. As for unemployment, for the population 16 and over unemployment went from 7.8% (Nov-Jan), to 7.9% (Feb-Apr) back to 7.8% (May-Jul) during 2010 before moving back up through 7.9% to 8% from Aug-Jan (2010-2011), following the emergency budget. Figures are similar excluding those over-64, with unemployment remaining static through Feb-Jul (8%) before moving through 8.1% to 8.2% during Aug-Jan.

Figures are particularly striking when focusing on the male workforce, with unemployment dropping from 8.9% to 8.5% during May-Jul, before rising again through 8.6% to 8.7% for Nov-Jan (including over-64s). Excluding over-64s, unemployment fell by 0.4% between May and July before again jumping 0.2% during Nov-Jan.

In all cases, unemployment has risen - often after falling - following the austerity budget. Again figures are sourced from the Office for National Statistics: http://www.statistics.gov.uk/cci/nugget.asp?id=192 and at http://www.statistics.gov.uk/STATBASE/P ... ?vlnk=8272 (Unemployment by age and duration)