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(Washington Post)   IMF: "Did we say austerity would help Greece? We meant hurt Greece, badly. Sorry for the confusion"   ( washingtonpost.com) divider line
    More: Obvious, International Monetary Fund, Greece, Greek economy, bond markets, scientific journals, advanced economies  
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8252 clicks; posted to Main » on 04 Jan 2013 at 9:08 AM (4 years ago)   |   Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



106 Comments     (+0 »)
 
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2013-01-04 12:59:59 AM  
I think that's 13,783rd time the Republican Economic Model has been blown out of the water.
 
2013-01-04 01:01:19 AM  
In other words, Krugman was right again?
 
2013-01-04 01:41:00 AM  
Oh that wasn't their goal? The IMF does that to every other country they deal with, they have it down to an art.
 
2013-01-04 01:48:33 AM  

Grand_Moff_Joseph: In other words, Krugman was right again?


Allow me to repeat that.

Grand_Moff_Joseph: In other words, Krugman was right again?


Suck on it austerians. Suck on it.
 
2013-01-04 02:28:45 AM  
I'm so shocked. So shocked and surprised.

And I'm not an economist. You can't UN-spend yourself to prosperity. Christ of crutches... everybody saw this.
 
2013-01-04 05:12:05 AM  
...because it did not fully understand how government austerity efforts would undermine economic growth.

  So, in other words, the head economist at the  International Monetary Fund knows less about economics than I do?
 
2013-01-04 06:49:04 AM  
I'm still unclear where the Fark Economist Posse thinks Greece should have gotten funds - they were (and are) spending more than they take in. Is the magical Euro fairy just going to sprinkle money into the treasury?

Of *course* the economy slows when you take a huge chunk of money out of it, duh. Same thing will happen in the US eventually - whether spending is tightened / taxes increased now or in fifty years, there comes a point where you can't keep spending an extra trillion bucks a year.

Difference of course being people will still loan us cash, because we're still good for it - and people won't loan to Greece, because they're not
 
2013-01-04 08:00:13 AM  

Speaker2Animals: Grand_Moff_Joseph: In other words, Krugman was right again?

Allow me to repeat that.

Grand_Moff_Joseph: In other words, Krugman was right again?

Suck on it austerians. Suck on it.


This!
 
2013-01-04 08:19:17 AM  

NewportBarGuy: I think that's 13,783rd time the Republican Economic Model has been blown out of the water.


Grand_Moff_Joseph: In other words, Krugman was right again?


whither_apophis: Oh that wasn't their goal? The IMF does that to every other country they deal with, they have it down to an art.


ecmoRandomNumbers: And I'm not an economist. You can't UN-spend yourself to prosperity. Christ of crutches... everybody saw this.


THIS THIS THIS THIS

stratagos: I'm still unclear where the Fark Economist Posse thinks Greece should have gotten funds - they were (and are) spending more than they take in. Is the magical Euro fairy just going to sprinkle money into the treasury?

Of *course* the economy slows when you take a huge chunk of money out of it, duh. Same thing will happen in the US eventually - whether spending is tightened / taxes increased now or in fifty years, there comes a point where you can't keep spending an extra trillion bucks a year.


But haven't Fark IndependentsTM been telling us all year that we're going to end up like Greece? I had said you couldn't compare us because unlike Greece we issue our own currency but was told that was not the case at all and I was really confused and uneducated.
 
2013-01-04 08:22:51 AM  
No shiat dumbass.  You can't deliver a bodyblow to an economic engine without consequences.  But hey, good job killing Greece and the Euro with your bullshiat.

If fiscal multipliers are small, countries can cut spending faster or raise more in taxes without much short-term damage.

So you still believe it works, you're just willing to acknowledge that every time it has been tried, the resulting GDP loss offset the spending cuts, leaving the country no better off and the people worse off.
 
2013-01-04 08:30:01 AM  
Typical liberal farking lies  - austerity is actually working in Greece, but no one wants to see it through properly to its happy ending. A little financial pain and the libs start whining... Greece just hasn't lowered their taxes and cut spending far enough... I mean have you actually seen how many restaraunts and coffee shops they have over there? Half of the people unemployed are on the doles because they like to sip their lattes in some trendy bistro rather then put their back into a little honest work.
 
2013-01-04 08:32:51 AM  

Grand_Moff_Joseph: In other words, Krugman was right again?


Yep Krugman and my dad - who is also an economist. Hes in his 70s and whenever the news is on he gets this look on his face of total disbelief. Like all academics hes sure if he could just explain it to them the right way then at least they could do the right thing if they wanted to.

So he writes journal articles and blog posts and walks around muttering a lot.
 
2013-01-04 08:53:29 AM  

Elzar: Typical liberal farking lies  - austerity is actually working in Greece, but no one wants to see it through properly to its happy ending. A little financial pain and the libs start whining... Greece just hasn't lowered their taxes and cut spending far enough... I mean have you actually seen how many restaraunts and coffee shops they have over there? Half of the people unemployed are on the doles because they like to sip their lattes in some trendy bistro rather then put their back into a little honest work.


poes-law.jpg
 
2013-01-04 09:09:52 AM  
So you mean drastically cutting spending during a recession to balance a budget hurts the economy?! Who would have guess.
 
2013-01-04 09:14:25 AM  
Those pigs still enforce Blasphemy laws. Right on par with the Yemenis and Pakis.
 
2013-01-04 09:14:31 AM  
Here's a little secret: THERE NEVER WAS REAL AUSTERITY IN GREECE.

Many politicians and commentators such as Paul Krugman claim that Europe's problem is austerity, i.e., there is insufficient government spending. The common argument goes like this: Due to a reduction of government spending, there is insufficient demand in the economy leading to unemployment. The unemployment makes things even worse as aggregate demand falls even more, causing a fall in government revenues and an increase in government deficits. European governments pressured by Germany (which did not learn from the supposedly fateful policies of Chancellor Heinrich Brüning) then reduce government spending even further, lowering demand by laying off public employees and cutting back on government transfers. This reduces demand even more in a never ending downward spiral of misery. What can be done to break out of the spiral? The answer given by commentators is simply to end austerity, boost government spending and aggregate demand. Paul Krugman even argues in favor for a preparation against an alien invasion, which would induce government to spend more. So the story goes. But is it true?

First of all, is there really austerity in the eurozone? One would think that a person is austere when she saves, i.e., if she spends less than she earns. Well, there exists not one country in the eurozone that is austere. They all spend more than they receive in revenues.

In fact, government deficits are extremely high, at unsustainable levels, as can been seen in the following chart that portrays government deficits in percentage of GDP. Note that the figures for 2012 are what governments wish for.

images.mises.org

The absolute figures of government deficits in billion euros are even more impressive.

images.mises.org

A good picture of "austerity" is also to compare government expenditures and revenues (relation of public expenditures and revenues in percentage).

images.mises.org

Imagine that a person you know spends 12 percent more in 2008 than her income, spends 31 percent more than her income the next year, spends 25 percent more than her income in 2010, and 26 percent more than her income in 2011. Would you regard this person as austere? And would you regard this behavior as sustainable? This is what the Spanish government has done. It shows itself incapable of changing this course. Perversely, this "austerity" is then made responsible for a shrinking Spanish economy and high unemployment.

Unfortunately, austerity is the necessary condition for recovery in Spain, the eurozone, and elsewhere. The reduction of government spending makes real resources available for the private sector that formerly had been absorbed by the state. Reducing government spending makes profitable new private investment projects and saves old ones from bankruptcy.

Take the following example. Tom wants to open a restaurant. He makes the following calculations. He estimates the restaurant's revenues at $10,000 per month. The expected costs are the following: $4,000 for rent; $1,000 for utilities; $2,000 for food; and $4,000 for wages. With expected revenues of $10,000 and costs of $11,000 Tom will not start his business.

Let's now assume that the government is more austere, i.e., it reduces government spending. Let's assume that the government closes a consumer-protection agency and sells the agency's building on the market. As a consequence, there is a tendency for housing prices and rents to fall. The same is true for wages. The laid-off bureaucrats search for new jobs, exerting downward pressure on wage rates. Further, the agency does not consume utilities anymore, leading toward a tendency of cheaper utilities. Tom may now rent space for his restaurant in the former agency for $3,000 as rents are coming down. His expected utility bill falls to $500, and hiring some of the former bureaucrats as dishwashers and waiters reduces his wage expenditures to $3,000. Now with expected revenue at $10,000 and costs at $8,500 the expected profits amounts to $1,500 and Tom can start his business.

As the government has reduced spending it can even reduce tax rates, which may increase Tom's after-tax profits. Thanks to austerity the government could also reduce its deficit. The money formerly used to finance the government deficit can now be lent to Tom for an initial investment to make the former agency's rooms suitable for a restaurant. Indeed, one of the main problems in countries such as Spain these days is that the real savings of the people are soaked up and channeled to the government via the banking system. Loans are practically unavailable for private companies, because banks use their funds to buy government bonds in order to finance the public deficit.

In the end, the question amounts to the following: Who shall determine what is produced and how? The government that uses resources for its own purposes (such as a "consumer-protection" agency, welfare programs, or wars), or entrepreneurs in a competitive process and as agents of consumers, trying to satisfy consumer wants with ever better and cheaper products (like Tom, who uses part of the resources formerly used in the government agency for his restaurant).

If you think the second option is better, austerity is the way to go. More austerity and less government spending mean fewer resources for the public sector (fewer "agencies") and more resources for the private sector, which uses them to satisfy consumer wants (more restaurants). Austerity is the solution to the problems in Europe and in the United States, as it fosters sustainable growth and reduces government deficits.

Lower GDP?

But does austerity not at least temporarily reduce GDP and lead to a downward spiral of economic activity?

Unfortunately, GDP is a quite misleading figure. GDP is defined as the market value of all final goods and services produced in a country in a given period.

There are two minor reasons why a lower GDP may not always be a bad sign.

The first reason relates to the treatment of government expenditures. Let us imagine a government bureaucrat who licenses businesses. When he denies a license for an investment project that never comes into being, how much wealth is destroyed? Is it the expected revenues of the project or its expected profits? What if the bureaucrat has unknowingly prevented an innovation that could save the economy billions of dollars per year? It is hard to say how much wealth destruction is caused by the bureaucrat. We could just arbitrarily take his salary of $50,000 per year and subtract it from private production. GDP would be lower.

Now hold your breath. In practice, the opposite is done. Government expenditures count positively in GDP. The wealth destroying activity of the bureaucrat raises GDP by $50,000. This implies that if the government licensing agency is closed and the bureaucrat is laid off, then the immediate effect of this austerity is a fall in GDP by $50,000. Yet, this fall in GDP is a good sign for private production and the satisfaction of consumer wants.

Second, if the structure of production is distorted after an artificial boom, the restructuring also entails a temporary fall in GDP. Indeed, one could only maintain GDP if production remained unchanged. If Spain or the United States had continued to use their boom structure of production, they would have continued to build the amount of housing they did in 2007. The restructuring requires a shrinking of the housing sector, i.e., a reduced use of factors of production in this sector. Factors of production must be transferred to those sectors where they are most urgently demanded by consumers. The restructuring is not instantaneous but organized by entrepreneurs in a competitive process that is burdensome and takes time. In this transition period, when jobs are destroyed in the overblown sectors, GDP tends to fall. This fall in GDP is just a sign that the necessary restructuring is underway. The alternative would be to produce the amount of housing of 2007. If GDP did not fall sharply, it would mean that the wealth-destroying boom was continuing as it did in the years 2005-2007.

Conclusion

Public austerity is a necessary condition for private flourishing and a rapid recovery. The problem of Europe (and the United States) is not too much but too little austerity - or its complete absence. A fall of GDP can be an indicator that the necessary and healthy restructuring of the economy is underway.
 
2013-01-04 09:16:13 AM  

Irving Maimway: NewportBarGuy: I think that's 13,783rd time the Republican Economic Model has been blown out of the water.

Grand_Moff_Joseph: In other words, Krugman was right again?

whither_apophis: Oh that wasn't their goal? The IMF does that to every other country they deal with, they have it down to an art.

ecmoRandomNumbers: And I'm not an economist. You can't UN-spend yourself to prosperity. Christ of crutches... everybody saw this.

THIS THIS THIS THIS

stratagos: I'm still unclear where the Fark Economist Posse thinks Greece should have gotten funds - they were (and are) spending more than they take in. Is the magical Euro fairy just going to sprinkle money into the treasury?

Of *course* the economy slows when you take a huge chunk of money out of it, duh. Same thing will happen in the US eventually - whether spending is tightened / taxes increased now or in fifty years, there comes a point where you can't keep spending an extra trillion bucks a year.

But haven't Fark IndependentsTM been telling us all year that we're going to end up like Greece? I had said you couldn't compare us because unlike Greece we issue our own currency but was told that was not the case at all and I was really confused and uneducated.


Couldn't tell you; I'm not a Fark Independent.

Acknowledging that being in the Euro both allowed Greece to borrow unpayable debts and removed their ability to just run the printing presses, when you have an option between sharp cuts mandated by the IMF or even sharper cuts when no one will loan to you, what do you do?
 
2013-01-04 09:16:31 AM  

Carth: So you mean drastically cutting spending during a recession to balance a budget hurts the economy?! Who would have guess.


Well, cutting spending because you have no money and no one will loan it to you
 
2013-01-04 09:18:32 AM  

Elzar: Typical liberal farking lies  - austerity is actually working in Greece, but no one wants to see it through properly to its happy ending. A little financial pain and the libs start whining... Greece just hasn't lowered their taxes and cut spending far enough... I mean have you actually seen how many restaraunts and coffee shops they have over there? Half of the people unemployed are on the doles because they like to sip their lattes in some trendy bistro rather then put their back into a little honest work.


most of the "honest work" is gone. moved to third world countries by the global capitalists who run the world.
 
2013-01-04 09:19:10 AM  
A - Its a blog
B - Its a WAPO blog
C - Fail
 
2013-01-04 09:22:13 AM  
Wait... so, slashing budgets and firing everybody during hard economic times is a bad thing now?  Well, color me f*cking surprised.  I was told that self-inflicted recessions were what economies craved.
 
2013-01-04 09:35:52 AM  
I'm surprised the overall influence of Greek Euro zone membership was for the most part, overlooked here.


Once a country's monetary policy is de coupled from it's political process they loose all control over their economy. Greece can't print truckloads of Drachmas like they used to in the past (like the US government is doing now) to stabilize their debt & their economy, so they're forced to take bail outs from other Euro zone nations or the ECB & IMF.

It took another 75 years, but German finally took over Europe, however reluctantly.

If Germany was NOT part of the Euro zone their currency would have strengthened to the point where German exports would be cost prohibitive and that production would shift to countries with weaker currencies & cheaper production costs.

But Greece, Portugal, Spain & Italy can't weaken their currency. They all belong to the common Euro. So, while the industrious & notoriously penny pinching Germans (much to their credit ha ha a pun, Germans don't like to buy things on credit) have a strengthening economy, the other countries in the Euro zone are kinda stuck.

IHMO, the Euro zone & it's common currency are uncharted waters in the field of Macroeconomics. Never in modern times have 17 countries come together to use a common currency without a common political structure. To pin Greek's issues on austerity alone (and I'm not an austerity advocate, per se, I think austerity means raising taxes on those who have the means, while taking a look at what's necessary spending & what isn't) is a little simplistic. What we're seeing in Greece is a totally new animal.

Another issues in Greece is it's almost considered your patriotic duty to dodge any and all takes. As the IRS says, there's a difference between Tax avoidance & tax EVASION. I do everything I can in the course of running my business to reduce the tax I pay, but I do everything by the book & the letter of the law. This is not the case in Greece. Rampant corruption and tax evasion have had serious negative repercussions on the Greek economy.

/lecture over.
 
2013-01-04 09:36:18 AM  

NewportBarGuy: I think that's 13,783rd time the Republican Economic Model has been blown out of the water.


Yup, because massive government spending has been so successful in Japan. Well if by successful you mean continuing recessions and a National debt exceeding 200% of their GDP then yes successful.
 
2013-01-04 09:38:12 AM  

Dadoody: Here's a little secret: THERE NEVER WAS REAL AUSTERITY IN GREECE.

Many politicians and commentators such as Paul Krugman claim that Europe's problem is austerity, i.e., there is insufficient government spending. The common argument goes like this: Due to a reduction of government spending, there is insufficient demand in the economy leading to unemployment. The unemployment makes things even worse as aggregate demand falls even more, causing a fall in government revenues and an increase in government deficits. European governments pressured by Germany (which did not learn from the supposedly fateful policies of Chancellor Heinrich Brüning) then reduce government spending even further, lowering demand by laying off public employees and cutting back on government transfers. This reduces demand even more in a never ending downward spiral of misery. What can be done to break out of the spiral? The answer given by commentators is simply to end austerity, boost government spending and aggregate demand. Paul Krugman even argues in favor for a preparation against an alien invasion, which would induce government to spend more. So the story goes. But is it true?

First of all, is there really austerity in the eurozone? One would think that a person is austere when she saves, i.e., if she spends less than she earns. Well, there exists not one country in the eurozone that is austere. They all spend more than they receive in revenues.

In fact, government deficits are extremely high, at unsustainable levels, as can been seen in the following chart that portrays government deficits in percentage of GDP. Note that the figures for 2012 are what governments wish for.

The absolute figures of government deficits in billion euros are even more impressive.

A good picture of "austerity" is also to compare government expenditures and revenues (relation of public expenditures and revenues in percentage).

Imagine that a person you know spends 12 percent more in 2008 than her income, spends 31 percent more than her income the next year, spends 25 percent more than her income in 2010, and 26 percent more than her income in 2011. Would you regard this person as austere? And would you regard this behavior as sustainable? This is what the Spanish government has done. It shows itself incapable of changing this course. Perversely, this "austerity" is then made responsible for a shrinking Spanish economy and high unemployment.

Unfortunately, austerity is the necessary condition for recovery in Spain, the eurozone, and elsewhere. The reduction of government spending makes real resources available for the private sector that formerly had been absorbed by the state. Reducing government spending makes profitable new private investment projects and saves old ones from bankruptcy.

Take the following example. Tom wants to open a restaurant. He makes the following calculations. He estimates the restaurant's revenues at $10,000 per month. The expected costs are the following: $4,000 for rent; $1,000 for utilities; $2,000 for food; and $4,000 for wages. With expected revenues of $10,000 and costs of $11,000 Tom will not start his business.

Let's now assume that the government is more austere, i.e., it reduces government spending. Let's assume that the government closes a consumer-protection agency and sells the agency's building on the market. As a consequence, there is a tendency for housing prices and rents to fall. The same is true for wages. The laid-off bureaucrats search for new jobs, exerting downward pressure on wage rates. Further, the agency does not consume utilities anymore, leading toward a tendency of cheaper utilities. Tom may now rent space for his restaurant in the former agency for $3,000 as rents are coming down. His expected utility bill falls to $500, and hiring some of the former bureaucrats as dishwashers and waiters reduces his wage expenditures to $3,000. Now with expected revenue at $10,000 and costs at $8,500 the expected profits amounts to $1,500 and Tom can start his business.

As the government has reduced spending it can even reduce tax rates, which may increase Tom's after-tax profits. Thanks to austerity the government could also reduce its deficit. The money formerly used to finance the government deficit can now be lent to Tom for an initial investment to make the former agency's rooms suitable for a restaurant. Indeed, one of the main problems in countries such as Spain these days is that the real savings of the people are soaked up and channeled to the government via the banking system. Loans are practically unavailable for private companies, because banks use their funds to buy government bonds in order to finance the public deficit.

In the end, the question amounts to the following: Who shall determine what is produced and how? The government that uses resources for its own purposes (such as a "consumer-protection" agency, welfare programs, or wars), or entrepreneurs in a competitive process and as agents of consumers, trying to satisfy consumer wants with ever better and cheaper products (like Tom, who uses part of the resources formerly used in the government agency for his restaurant).

If you think the second option is better, austerity is the way to go. More austerity and less government spending mean fewer resources for the public sector (fewer "agencies") and more resources for the private sector, which uses them to satisfy consumer wants (more restaurants). Austerity is the solution to the problems in Europe and in the United States, as it fosters sustainable growth and reduces government deficits.

Lower GDP?

But does austerity not at least temporarily reduce GDP and lead to a downward spiral of economic activity?

Unfortunately, GDP is a quite misleading figure. GDP is defined as the market value of all final goods and services produced in a country in a given period.

There are two minor reasons why a lower GDP may not always be a bad sign.

The first reason relates to the treatment of government expenditures. Let us imagine a government bureaucrat who licenses businesses. When he denies a license for an investment project that never comes into being, how much wealth is destroyed? Is it the expected revenues of the project or its expected profits? What if the bureaucrat has unknowingly prevented an innovation that could save the economy billions of dollars per year? It is hard to say how much wealth destruction is caused by the bureaucrat. We could just arbitrarily take his salary of $50,000 per year and subtract it from private production. GDP would be lower.

Now hold your breath. In practice, the opposite is done. Government expenditures count positively in GDP. The wealth destroying activity of the bureaucrat raises GDP by $50,000. This implies that if the government licensing agency is closed and the bureaucrat is laid off, then the immediate effect of this austerity is a fall in GDP by $50,000. Yet, this fall in GDP is a good sign for private production and the satisfaction of consumer wants.

Second, if the structure of production is distorted after an artificial boom, the restructuring also entails a temporary fall in GDP. Indeed, one could only maintain GDP if production remained unchanged. If Spain or the United States had continued to use their boom structure of production, they would have continued to build the amount of housing they did in 2007. The restructuring requires a shrinking of the housing sector, i.e., a reduced use of factors of production in this sector. Factors of production must be transferred to those sectors where they are most urgently demanded by consumers. The restructuring is not instantaneous but organized by entrepreneurs in a competitive process that is burdensome and takes time. In this transition period, when jobs are destroyed in the overblown sectors, GDP tends to fall. This fall in GDP is just a sign that the necessary restructuring is underway. The alternative would be to produce the amount of housing of 2007. If GDP did not fall sharply, it would mean that the wealth-destroying boom was continuing as it did in the years 2005-2007.

Conclusion

Public austerity is a necessary condition for private flourishing and a rapid recovery. The problem of Europe (and the United States) is not too much but too little austerity - or its complete absence. A fall of GDP can be an indicator that the necessary and healthy restructuring of the economy is underway.


I wonder what the private sector does with all that money it makes when it takes the resources away the public sector? Oh that's right it goes out of the country into tax havens.
 
2013-01-04 09:38:44 AM  

stratagos: I'm still unclear where the Fark Economist Posse thinks Greece should have gotten funds - they were (and are) spending more than they take in. Is the magical Euro fairy just going to sprinkle money into the treasury?


Eh yeah it does. If you allow it to be printed. But if the Northern countries (of which I am a member) call your bluff on this and say: not gonna happen we like our pensions and savings, then this is the result.
 
2013-01-04 09:39:00 AM  

Dadoody: Here's a little secret: THERE NEVER WAS REAL AUSTERITY IN GREECE.



Were you trying to impress in a FARK thread???

i1206.photobucket.com
 
2013-01-04 09:41:31 AM  

Elzar: Typical liberal farking lies  - austerity is actually working in Greece, but no one wants to see it through properly to its happy ending. A little financial pain and the libs start whining... Greece just hasn't lowered their taxes and cut spending far enough... I mean have you actually seen how many restaraunts and coffee shops they have over there? Half of the people unemployed are on the doles because they like to sip their lattes in some trendy bistro rather then put their back into a little honest work.



Libs, libs, ibs, libs....
 
2013-01-04 09:43:54 AM  

Dadoody: Unfortunately, austerity is the necessary condition for recovery in Spain, the eurozone, and elsewhere. The reduction of government spending makes real resources available for the private sector that formerly had been absorbed by the state. Reducing government spending makes profitable new private investment projects and saves old ones from bankruptcy.


All evidence to the contrary.
 
2013-01-04 09:46:30 AM  

hasty ambush: NewportBarGuy: I think that's 13,783rd time the Republican Economic Model has been blown out of the water.

Yup, because massive government spending has been so successful in Japan. Well if by successful you mean continuing recessions and a National debt exceeding 200% of their GDP then yes successful.


You mean Japan the country that recently topped the healthiest country list with the highest life expectancy, Japan the third largest economy in the world with an unemployment rate of 4.1%... that Japan?
 
2013-01-04 09:47:43 AM  
When will liberals understand... nobody is willingly lending to Greece, they can't control their spending. WHen nobody will give you a dollar, austerity is the ONLY option. I'm sure all the liberals on fark will take a nice collection out to send money themselves to Greece, it is a grand investment.

Likewise, remember how you on the left keep claiming it will take a few years to see the true effects of the Stimulus? Stimulus spending has always had short term benefits with longer term negatives. Austerity measures are the opposite, short term effects with longer term benefits. It has been less than a year since Greece actually reduced spending by a measurable degree. Less than a year. Yet you are all calling it a failure based on one year. Based on this rationale ACA and the Stimulus were also failures. They have produced little growth , little coverage, and shown no true benefit.

Austerity has worked in the past. 1930s Australia recovered faster from the worldwide depression than the US. Estonia has higher growth rates. Sweden/Canada both implemented mild austerity measures within the last decade, decreasing spending relative to GDP.

Austerity didn't get Greece into the mess. Spending got Greece into the mess. An easily avoidable tax burden by the populace got Greece into the mess. Not austerity. Austerity is literally the only option that Greece would have if in isolation. Nobody wants to lend to them. The EU is being pressured into continuing to fund money to Greece, and yet Greece still misuses the funds being given it. There are no other options. Germany is tired of it, the EU is tired of it.

It takes more than a year. Calling it a failure is about as stupid a position as one can take after a single year.
 
2013-01-04 09:49:34 AM  

GAT_00: No shiat dumbass.  You can't deliver a bodyblow to an economic engine without consequences.  But hey, good job killing Greece and the Euro with your bullshiat.

If fiscal multipliers are small, countries can cut spending faster or raise more in taxes without much short-term damage.

So you still believe it works, you're just willing to acknowledge that every time it has been tried, the resulting GDP loss offset the spending cuts, leaving the country no better off and the people worse off.


Yes, looking at single year turns in GDP is the height of good economic policy...

God damn people, austerity measures are not meant as a 1 year fix. This is beyond stupid.
 
2013-01-04 09:49:47 AM  

Carth: You mean Japan the country that recently topped the healthiest country list with the highest life expectancy, Japan the third largest economy in the world with an unemployment rate of 4.1%... that Japan?


Japan is proof-positive that debt-to-GDP isn't the end-all, be-all economic indicator that Austrians claim it is.  Greece's debt-to-GDP is right around 150%.  The difference is that Japan has a strong economy and control of its currency, so its interest rates stay low and its debt stays manageable, even over 200%.
 
2013-01-04 09:52:52 AM  
1) They don't have any money in the bank
2) People won't loan them anymore money since it's a pretty good bet they won't ever pay it back


Therefor you get austerity forced on them by the fact they can't spend money they don't have

Pretty damn simple.
 
2013-01-04 09:55:03 AM  

CujoQuarrel: 1) They don't have any money in the bank
2) People won't loan them anymore money since it's a pretty good bet they won't ever pay it back


Therefor you get austerity forced on them by the fact they can't spend money they don't have

Pretty damn simple.


10 year greek bonds are down to 11% (from nearly 40% back in March). I think if they raised rates again people would loan them money.
 
2013-01-04 09:56:40 AM  

Cdr.Murdock: So, while the industrious & notoriously penny pinching Germans (much to their credit ha ha a pun, Germans don't like to buy things on credit)


You know who else is stereotyped as being notoriously penny pinching...
 
2013-01-04 09:58:33 AM  

Elzar: Typical liberal farking lies  - austerity is actually working in Greece, but no one wants to see it through properly to its happy ending. A little financial pain and the libs start whining... Greece just hasn't lowered their taxes and cut spending far enough... I mean have you actually seen how many restaraunts and coffee shops they have over there? Half of the people unemployed are on the doles because they like to sip their lattes in some trendy bistro rather then put their back into a little honest work.


I agree they need to cut spending and cut taxes. But you left out a big part of the plan. They need to increase defense spending and build 11 new warships. That will totally pay for itself I hear.

/And they really need a hit of the spice weasel
//BAM!
 
2013-01-04 10:00:09 AM  
This is all a bunch of lies. It is simple as pie to solve the world's financial problems. It just won't be seen as "fair". So, here we go on this pathway to chaos, knowing the solution is right there, but that the people who call the shots don't want to see it happen. Mostly because they'll lose their control, but also because they stand to lose their money. The super rich are the reason the global economy is failing. How is an economy expected to thrive when you keep taking and hoarding more money?
 
2013-01-04 10:00:46 AM  
You know what happened the last time Europe tried austerity to fix its economies? THE DARK AGES! Which you probably know was a 1000-year depression. It was caused by ending all of the Roman tax-and-spend programs and was replaced by a 0% tax on the rich, with all taxes paid by the poor peasants. The peasants were in constant debt and became economic slaves to the wealthy land-owners who offered slave wages. There was no competition or capitalism, because there was no incentive for the wealthy to give up or risk anything.

So how did they escape? The Black Death. It killed 1/4 of Europe, and the surviving poor consolidated wealth. There were fewer workers, so land owners had to offer incentives to peasants to stay and not move to some other guy's fief. The increased wages and inheritance savings birthed a merchant economy, which led to a mercantile middle class. This surge of capitalism and spending created the Renaissance, and the Dark Ages were over.


So, in conclusion: Austerity bad, wealth in the hands of the poor good. Supply-side conservative ideology bad, Demand-side economics good.
 
2013-01-04 10:02:04 AM  
To put it more succinctly. France and england are not a booming economy yet after raising taxes on the rich a year ago, needless to say taxing the rich doesn't work.

This is the same argument you liberals are making of greece. Reduced spending started less than a year ago by any significant measure.

Most countries in europe have increased spending, just like the united states... yet still in an economic quagmire.
 
2013-01-04 10:03:40 AM  

Speaker2Animals: Grand_Moff_Joseph: In other words, Krugman was right again?

Allow me to repeat that.

Grand_Moff_Joseph: In other words, Krugman was right again?

Suck on it austerians. Suck on it.


You know who else was austerian?
 
2013-01-04 10:03:44 AM  

Dadoody: Here's a little secret: THERE NEVER WAS REAL AUSTERITY IN GREECE


Your giant wall of text was based upon an invalid assumption.

Austerity as you propose it makes sense with one critical point you missed:

In order for what you say to be true, Greece must first default on its current liabilities

If the Greeks had simply defaulted, they could have avoided all this mess and been free to restart their economy at ground zero and build it back up, however, by attempting to remain in the Eurozone and attached to the Euro, they find themselves between a rock and a hard place.

The Greek economy is fubar because the markets were distorted by a multitude of problems, from unearned credit via their affiliation with the Euro, to improper tax collecting and over employment in the public sector. These structural problems are unsustainable and rather then torturing themselves they should have made a clean cut from the past, defaulted on their loans and reset their economy. As it is now, the proposed austerity you are so gung ho about is simply one more market distortion stacked upon a litany of others
 
2013-01-04 10:05:02 AM  

Dadoody: Copy & Paste Derp


SuperPAC money is still paying for posts, huh?
 
2013-01-04 10:06:16 AM  

Dadoody: Here's a little secret: THERE NEVER WAS REAL AUSTERITY IN GREECE.

----snip----

[images.mises. ...


Id be far more impressed if you hadn't simply cut and pasted a talking point. Seriously do you even think for yourself? Are you even aware that Greece spends about the same on a per person level as the average EU country? Are you even aware that their deficit is primarily related to a failure to collect taxes, especially on the wealthy? Are you even aware That the "austerity" measures have crushed their GDP? Making it even harder to recover?

If the IMF had wanted to fix Greece it would have done so by forcing Greece to get real tax reform, maybe execute a few tax evaders as a example. This austerity BS? It was all for show, and to allow them to try and foist more of the eventual pain onto the Greece citizens, rather then on the wealthy. And they've managed to transfer pain from companies, onto the citizens of the EU. Its disgusting, and your mindless copy and paste drivel is an insult to anyone who uses their brains.

Come back when you can back yourself up with your own individual facts, not copy and pasted drivel.
 
2013-01-04 10:09:00 AM  

bitterdust: Dadoody: Here's a little secret: THERE NEVER WAS REAL AUSTERITY IN GREECE

Your giant wall of text was based upon an invalid assumption.

Austerity as you propose it makes sense with one critical point you missed:

In order for what you say to be true, Greece must first default on its current liabilities


What? And make businesses whom had made poor investment choices actually experience true risk? Thats insanity! (Sarcasm here for the sarcasm impaired)
 
2013-01-04 10:09:28 AM  

Carth: CujoQuarrel: 1) They don't have any money in the bank
2) People won't loan them anymore money since it's a pretty good bet they won't ever pay it back


Therefor you get austerity forced on them by the fact they can't spend money they don't have

Pretty damn simple.

10 year greek bonds are down to 11% (from nearly 40% back in March). I think if they raised rates again people would loan them money.


Someone might. It sure won't be any of mine.
If they can find some suckers investors for their bonds then they'll prob stagger on a few more years.
Then crash
 
2013-01-04 10:10:26 AM  
The demonstrated failure of liberal ideas is NEVER to stop doing them. Don't you understand by now!?
 
2013-01-04 10:11:40 AM  

randomjsa: The demonstrated failure of liberal ideas is NEVER to stop doing them. Don't you understand by now!?


Well this makes even less sense than usual.
 
2013-01-04 10:12:01 AM  
What I find entertaining is that the 'experts' explain with absolute certainty how they were wrong before, but are now right. Keep believing, folks!
 
2013-01-04 10:13:06 AM  
Dadoody sure can write fast. He wrote it all himself, off the top of head in 5 minutes. He's not a paid shill, oh no. He's just a concerned citizen.
 
2013-01-04 10:15:41 AM  

Dadoody: Here's a little secret: THERE NEVER WAS REAL AUSTERITY IN GREECE.



There is a flawed assumption in your reasoning. Pretty much everything you wrote boils down to "spend within your means" -- which makes perfect sense. But you assume that private companies having more money equates to benefits for all (cheaper/better projects).

There's been 100's (1000's?) of examples throughout history of private companies that don't behave well, hurt the environment, mistreat their workers (child labor, anyone?), intentionally lie, price gouge, monopolize, etc, etc, etc. The notion that capitalism will eventually weed out these many many bad apples is heinously naive.

Government's job (if done correctly) is to level the playing field. Austerity will result in the playing field being far more uneven. I'm not saying that the solution is to continue government overspending -- as you said, that doesn't make sense -- but we need to remove ourselves from the notion that putting money in the hands of the richest corporations will somehow solve all our problems. It won't.

What really needs to happen in government is that spending related to leveling the playing field needs to either stay the same or increase (education, safety regulations, scientific research, labor laws, etc). Everything else should be cut (corporate welfare, tax breaks for the wealthy, etc). Rich people and rich corporations don't need government assistance -- they can and will take care of themselves. The fact that soooo much of our governmental spending is tied to them is really the core of nearly every problem we're experiencing right now.
 
2013-01-04 10:18:21 AM  

NewportBarGuy: I think that's 13,783rd time the Republican Economic Model has been blown out of the water.


Of course it didn't help. They should just keep getting into more and more debt. There are obviously no consequences for a country to have billions and trillion in debt like the US does. We should give everyone in the world $1,000,000 and all our problems would be solved.
 
2013-01-04 10:18:55 AM  

whither_apophis: Oh that wasn't their goal? The IMF does that to every other country they deal with, they have it down to an art.


Bears repeating.
 
2013-01-04 10:21:34 AM  
Just like everyone else they should have just defaulted, taken the pain for a few years and moved on.

But like idiots they listened to the bankers and now they're economic slaves for the foreseeable future.
 
2013-01-04 10:22:03 AM  

Grand_Moff_Joseph: In other words, Krugman was right again?


Well no...

http://krugman.blogs.nytimes.com/2012/05/13/eurodammerung-2/

May 13, 2012,

"Some of us have been talking it over, and here's what we think the end game looks like:

1. Greek euro exit, very possibly next month.

2. Huge withdrawals from Spanish and Italian banks, as depositors try to move their money to Germany.

3a. Maybe, just possibly, de facto controls, with banks forbidden to transfer deposits out of country and limits on cash withdrawals.

3b. Alternatively, or maybe in tandem, huge draws on ECB credit to keep the banks from collapsing.

4a. Germany has a choice. Accept huge indirect public claims on Italy and Spain, plus a drastic revision of strategy - basically, to give Spain in particular any hope you need both guarantees on its debt to hold borrowing costs down and a higher eurozone inflation target to make relative price adjustment possible; or:

4b. End of the euro.

And we're talking about months, not years, for this to play out."
 
2013-01-04 10:29:10 AM  
Uhhh, Greece needed to be hurt because they were living above their means... Rainbows and Unicorns for all would not have solved their issues.
 
2013-01-04 10:32:44 AM  
TIKIMAN87 Good lord, but you're dumb. I'm guessing the 87 is when you were born, which makes sense.
 
2013-01-04 10:35:04 AM  
It's possible that both the Greek system needed significant overhauls and changes and the IMF austerity policies were overly draconian and poorly targeted.
 
2013-01-04 10:35:36 AM  

Elzar: . Greece just hasn't lowered their taxes and cut spending far enough


Austerity means spending cuts coupled with (painful) tax increases. It's the tax increases that hurt the economy. And if you're economy is structured to where it's dependent on government spending because economic mobility is stifled, then the spending cuts hurt too.
 
2013-01-04 10:39:46 AM  

Red_Fox: Just like everyone else they should have just defaulted, taken the pain for a few years and moved on.

But like idiots they listened to the bankers and now they're economic slaves for the foreseeable future.


Do what Iceland did and tell the bankers to fark themselves.
 
2013-01-04 10:41:11 AM  
Irving Maimway
But haven't Fark IndependentsTM been telling us all year that we're going to end up like Greece? I had said you couldn't compare us because unlike Greece we issue our own currency but was told that was not the case at all and I was really confused and uneducated


I know you think you are being cute by calling republicans "fark independents" but there are some of us that really do pride ourselves on independent thought, we kindly ask you to stop using "independent" in a derogatory way. We struggle as it is to get people to think outside of their party lines, we don't need people mocking free thought
 
2013-01-04 10:58:17 AM  

jigger: Do what Iceland did and tell the bankers to fark themselves.


Everybody said Iceland was doomed when they did that, but they've recovered better than the vast majority of Europe.  The severity of the problems in Europe and elsewhere are caused in large part by banks refusing to take losses on bad investments, or at the very least, provide a reasonable degree of debt forgiveness to give indebted countries a chance to get their houses in order.
 
2013-01-04 11:08:13 AM  
Apparently we're not allowed to call a wall of stupid a wall of stupid anymore according to the Fark Mods.
 
2013-01-04 11:11:42 AM  

m1ke: Uhhh, Greece needed to be hurt because they were living above their means... Rainbows and Unicorns for all would not have solved their issues.


Maybe you should research it more. their spending per person was about average for the EU....so they werent spending beyond their means...they just werent collecting enough taxes.
 
2013-01-04 11:22:05 AM  

Blink: Dadoody: Here's a little secret: THERE NEVER WAS REAL AUSTERITY IN GREECE.

There is a flawed assumption in your reasoning. Pretty much everything you wrote boils down to "spend within your means" -- which makes perfect sense. But you assume that private companies having more money equates to benefits for all (cheaper/better projects).

There's been 100's (1000's?) of examples throughout history (1) of private companies that don't behave well, hurt the environment, mistreat their workers (child labor, anyone?), intentionally lie, price gouge, monopolize, etc, etc, etc. The notion that capitalism will eventually weed out these many many bad apples is heinously naive.

Government's job (if done correctly) is to level the playing field. (2) Austerity will result in the playing field being far more uneven. (3) I'm not saying that the solution is to continue government overspending -- as you said, that doesn't make sense -- but we need to remove ourselves from the notion that putting money in the hands of the richest corporations will somehow solve all our problems. It won't.

(4) What really needs to happen in government is that spending related to leveling the playing field needs to either stay the same or increase (education, safety regulations, scientific research, labor laws, etc). Everything else should be cut (corporate welfare, tax breaks for the wealthy, etc). Rich people and rich corporations don't need government assistance -- they can and will take care of themselves. The fact that soooo much of our governmental spending is tied to them is really the core of nearly every problem we're experiencing right now.


While I am an engineer, an analyzer and developer of system interactions, and therefore not well educated on financial matters (an MBA will be pursued eventually I think, though), here's my thoughts based on your comments...

(1) society's acceptance of these conditions has changed drastically - it took laws to get it going (spurred by the common people's rejection of unfettered capitalism), and laws to keep reminding some people (corporations are run by people) of their importance... but that work is done. Nobody (sane) is suggesting unfettered capitalism a la the 1890s, that's a straw man. Capitalism doesn't weed out these attempts, current established societal norms (backed by laws) now do. None of that would go away.

(2) We as a society do the levelling, directing the government what to provide support for or not. Therefore, how will austerity result in the field being more unlevel? How will people/corporations somehow take advantage of less government burden to oppress and monopolize workers or the economy? Why will our societal rejection of harsh worker treatment be removed?

(3) Money in the hands of the richest corporations isn't the issue, it's allowing the smaller, growing and innovating corporations to keep more of their money to grow and innovate more with. As you said, the rich can pay their taxes. They are, also, the minority. The small businesses that provide unique products and skilled services to those large, rich corporations are what need the boost to grow our economy, and who would benefit most from austerity measures from what I can tell, through less tax burden on them.

(4) Agree nearly completely... don't have time to type more on this unfortunately, maybe later.

/sorry, talk amongst yourselves, I'll give you a topic:
 
2013-01-04 11:25:25 AM  

Greywar: m1ke: Uhhh, Greece needed to be hurt because they were living above their means... Rainbows and Unicorns for all would not have solved their issues.

Maybe you should research it more. their spending per person was about average for the EU....so they werent spending beyond their means...they just werent collecting enough taxes.


If they cannot afford to spend per EU average then they were spending beyond their means. An average means some spend more some spend less. Greece should be on the less side of that.
 
2013-01-04 11:26:48 AM  

Grand_Moff_Joseph: In other words, Krugman was right again?



Define right:

UNEMPLOYMENT UP TO 7.8%
DEBT HITS $16,432,706,000,000.00
 
2013-01-04 11:35:19 AM  
You mean withdrawing medical care from a sick patient doesn't work?
 
2013-01-04 11:41:37 AM  

Carth: hasty ambush: NewportBarGuy: I think that's 13,783rd time the Republican Economic Model has been blown out of the water.

Yup, because massive government spending has been so successful in Japan. Well if by successful you mean continuing recessions and a National debt exceeding 200% of their GDP then yes successful.

You mean Japan the country that recently topped the healthiest country list with the highest life expectancy, Japan the third largest economy in the world with an unemployment rate of 4.1%... that Japan?


Yes. The only reason unemployment is low is they have a shrinking labor pool.

The Japan Center for Economic Research projected GDP to flat-line for the next 40 years.

japan is currently facing a myriad of intractable and unprecedented challenges -- from a demographic crisis to border conflicts to a strong yen. The population is aging quickly. The energy sector is still reeling from the March 2011 Tohoku earthquake, tsunami and nuclear disaster. The younger generation, having grown up amid deflation and economic stagnation, is loath to take career risks. Students are studying abroad in fewer numbers. Tepid economic growth, combined with massive public sector debt and continued deficits, will likely produce a fiscal crisis in the near future -- despite the fact that more than 90% of the debt is held domestically. Gross public debt to GDP now stands at nearly 250%.

Link
 
2013-01-04 11:43:46 AM  

hasty ambush: Grand_Moff_Joseph: In other words, Krugman was right again?


Define right:

UNEMPLOYMENT UP TO 7.8%
DEBT HITS $16,432,706,000,000.00


t3.gstatic.com

t1.gstatic.com

t1.gstatic.com
 
2013-01-04 11:54:33 AM  
NewportBarGuy: "I think that's 13,783rd time the Republican Economic Model has been blown out of the water."

Supply-side policies cannot fail. They can only *be* failed.
 
2013-01-04 11:58:42 AM  
mrlewish: "You mean withdrawing medical care from a sick patient doesn't work?"

Well, it works for the lenders who get a little more of their bad bet paid off before the guy dies.
I mean, extending *more* debt so they guy can live and maybe pay it all back?
That means expenditures on this quarter's numbers, acting as a drag on my bonus, in return for revenue *years* down the line, after I've long since left that position and only makes some other random yahoo look good if it pays off. Why the hell would I sign off on that?
 
2013-01-04 12:02:34 PM  

Dadoody: Conclusion

Public austerity is a necessary condition for private flourishing and a rapid recovery. The problem of Europe (and the United States) is not too much but too little austerity - or its complete absence. A fall of GDP can be an indicator that the necessary and healthy restructuring of the economy is underway.


Unfortunately your x + y calculation and anecdotes of austerity don't take into account that these are real life breathing people who have to eat, make rent or house payments, pay for healthcare and necessities. No people are going to allow those same bureaucrats and politicians that you rail against to impoverish them while they bring the governments financial house in order. They will change the government through their votes, they will riot, they will revolt.

Austerity cause pain for the poor and reduces the middle class. If you are rich then surviving austerity will allow you to put your remaining capital to work in a boom economy, if you are poor you starve, if you are middle class you become poor.
 
2013-01-04 12:15:59 PM  

mrlewish: You mean withdrawing medical care from a sick patient doesn't work?


Depends on your goal. If you are a health person and don't want to pay for the sick person's care out of your pocked then withdrawing medical care and the cost incurred does work. Sadly the sick person dies, but hey fark them you got yours.
 
2013-01-04 12:18:08 PM  

stratagos: I'm still unclear where the Fark Economist Posse thinks Greece should have gotten funds - they were (and are) spending more than they take in. Is the magical Euro fairy just going to sprinkle money into the treasury?

Of *course* the economy slows when you take a huge chunk of money out of it, duh.


Exactly. That's what really nailed Greece--their economy was no longer being propped up by outside money. It was obvious it was going to be horribly painful, the austerity measures were about trying to control the crash.

whither_apophis: Oh that wasn't their goal? The IMF does that to every other country they deal with, they have it down to an art.


By the time the IMF gets involved a country is really messed up--the result is inevitably going to be bad for the country and the IMF shouldn't be blamed for that. The IMFs job is to try to bring things down in a controlled fashion so they don't fall any harder than is necessary.
 
2013-01-04 12:22:52 PM  

hasty ambush: Carth: hasty ambush: NewportBarGuy: I think that's 13,783rd time the Republican Economic Model has been blown out of the water.

Yup, because massive government spending has been so successful in Japan. Well if by successful you mean continuing recessions and a National debt exceeding 200% of their GDP then yes successful.

You mean Japan the country that recently topped the healthiest country list with the highest life expectancy, Japan the third largest economy in the world with an unemployment rate of 4.1%... that Japan?

Yes. The only reason unemployment is low is they have a shrinking labor pool.

The Japan Center for Economic Research projected GDP to flat-line for the next 40 years.

japan is currently facing a myriad of intractable and unprecedented challenges -- from a demographic crisis to border conflicts to a strong yen. The population is aging quickly. The energy sector is still reeling from the March 2011 Tohoku earthquake, tsunami and nuclear disaster. The younger generation, having grown up amid deflation and economic stagnation, is loath to take career risks. Students are studying abroad in fewer numbers. Tepid economic growth, combined with massive public sector debt and continued deficits, will likely produce a fiscal crisis in the near future -- despite the fact that more than 90% of the debt is held domestically. Gross public debt to GDP now stands at nearly 250%.

Link


So with a shrinking labor pool they are expected to maintain their GDP meaning worker productivity and median income will rise while unemployment will remain low. Since they aren't studying as much in the US they won't be burdened with $200,000 in student loan debt and will still enjoy longer life expectancy and quality of life.... Yea, i'm sure Japanese citizens are really worried about their debt to GDP ratio.
 
2013-01-04 12:44:37 PM  

wingnut396: Cdr.Murdock: So, while the industrious & notoriously penny pinching Germans (much to their credit ha ha a pun, Germans don't like to buy things on credit)

You know who else is stereotyped as being notoriously penny pinching...


It's TRUE! We tend to hate others because we see something of ourselves in them that makes us uneasy.

I use "ourselves" out of context. I'm not of Germanic decent. My people got shuffled around by the Nazi's & the Soviets during the last WW, and by the English since the middle ages....
 
2013-01-04 01:11:25 PM  

Slaves2Darkness: Unfortunately your x + y calculation and anecdotes of austerity don't take into account that these are real life breathing people


Economics works better with caricatures of people, not actual people.
 
2013-01-04 01:40:22 PM  
Iceland

\That is all
\\Fark the Private Central Banking Cartel
 
2013-01-04 02:16:45 PM  

doczoidberg: Elzar: Typical liberal farking lies  - austerity is actually working in Greece, but no one wants to see it through properly to its happy ending. A little financial pain and the libs start whining... Greece just hasn't lowered their taxes and cut spending far enough... I mean have you actually seen how many restaraunts and coffee shops they have over there? Half of the people unemployed are on the doles because they like to sip their lattes in some trendy bistro rather then put their back into a little honest work.


Libs, libs, ibs, libs....


Meanwhile down on Wall St. The Masters of the Universe crunch numbers tirelessly and really earn their 6 figure salaries and 7-8 figure bonuses that are siphoned from our investments and accounts in fees and on every single financial transaction made.
 
2013-01-04 02:25:49 PM  

Carth: So with a shrinking labor pool they are expected to maintain their GDP meaning worker productivity and median income will rise while unemployment will remain low.


Gross, yes.
Net, no.

They have to pay for their exploding golden population somehow.
 
2013-01-04 03:05:19 PM  
Right wingers ALWAYS trot out an argument which deep down has a major fallacy due to an aspect of the argument they conveniently forget.

"A government budget is just like a household budget, as each entity only has so much money and will get into trouble if they spend more than they earn. Therefore austerity and budget cuts are essential." [my quote]

This is like comparing apples and oranges. You try, as an individual, to print cash money and see how far you get before the law catches up with and imprisons you. However, governments and central banks have the power and authority to create money. This ability is often referred to as "quantitative easing." http://en.wikipedia.org/wiki/Quantitative_easing

///Funny how right-wingers ignore the one piece of evidence which utterly demolishes their argument on this.

///Not the first time they have argued in this fashion either

///Not by a LONG shot!
 
2013-01-04 03:37:22 PM  

Dadoody: Public austerity is a necessary condition for private flourishing and a rapid recovery. The problem of Europe (and the United States) is not too much but too little austerity - or its complete absence. A fall of GDP can be an indicator that the necessary and healthy restructuring of the economy is underway.


How come all evidence seems to prove the contrary and proves to be nothing but a disappointment?
 
2013-01-04 03:38:25 PM  
So, if you don't take care of your people, they become non-productive. If you don't water your crops and livestock they fail and die. AND the capitalistic wet dream of a zero-maintenance cash cow is only a dream.

/The IMF should spend more time playing Farmville.
 
2013-01-04 03:41:10 PM  

FlippityFlap: TIKIMAN87 Good lord, but you're dumb. I'm guessing the 87 is when you were born, which makes sense.


Hey, I was born in 1987 too and even I don't believe in that BS.

/give us some credit here
 
2013-01-04 03:55:59 PM  
>>>Thinking that Greece won't be farked either way

Dohohoho.

Their model was never sustainable. You'll just move the pain around depending on what strategy you use.
 
2013-01-04 04:23:29 PM  

Dadoody: Public austerity is a necessary condition for private flourishing and a rapid recovery.


Human well being is more important than a spreadsheet cell.
 
2013-01-04 04:26:30 PM  

flynn80: Iceland

\That is all
\\Fark the Private Central Banking Cartel


Yep. All this suffering over funny money that, if it all vanished tomorrow, would have no impact on the actual material possessions or resources available to the planet. It's like all of humanity has psyched itself out into thinking we're somehow reliant on play currency.
 
2013-01-04 04:28:02 PM  

SacriliciousBeerSwiller: flynn80: Iceland

\That is all
\\Fark the Private Central Banking Cartel

Yep. All this suffering over funny money that, if it all vanished tomorrow, would have no impact on the actual material possessions or resources available to the planet. It's like all of humanity has psyched itself out into thinking we're somehow reliant on play currency.


(of course, to fix this, everyone would have to pull their head out of their ass at the same time)
(debt should be reset/forgiven in one fell swoop...which is what ancient societies did all the time)
 
2013-01-04 05:30:15 PM  

hasty ambush: Greywar: m1ke: Uhhh, Greece needed to be hurt because they were living above their means... Rainbows and Unicorns for all would not have solved their issues.

Maybe you should research it more. their spending per person was about average for the EU....so they werent spending beyond their means...they just werent collecting enough taxes.

If they cannot afford to spend per EU average then they were spending beyond their means. An average means some spend more some spend less. Greece should be on the less side of that.


Your seeming ability to comment as if you are an authority, while displaying zero understanding of the issue, is pretty damn funny.
 
2013-01-04 05:33:11 PM  

Greywar: m1ke: Uhhh, Greece needed to be hurt because they were living above their means... Rainbows and Unicorns for all would not have solved their issues.

Maybe you should research it more. their spending per person was about average for the EU....so they werent spending beyond their means...they just werent collecting enough taxes.


Umm...doesn't that mean they were spending beyond their means?
 
2013-01-04 05:48:57 PM  

hasty ambush: NewportBarGuy: I think that's 13,783rd time the Republican Economic Model has been blown out of the water.

Yup, because massive government spending has been so successful in Japan. Well if by successful you mean continuing recessions and a National debt exceeding 200% of their GDP then yes successful.


I thought I already educated you about this in another thread. Go away.
 
2013-01-04 05:59:05 PM  

Gdalescrboz: Irving Maimway
But haven't Fark IndependentsTM been telling us all year that we're going to end up like Greece? I had said you couldn't compare us because unlike Greece we issue our own currency but was told that was not the case at all and I was really confused and uneducated

I know you think you are being cute by calling republicans "fark independents" but there are some of us that really do pride ourselves on independent thought, we kindly ask you to stop using "independent" in a derogatory way. We struggle as it is to get people to think outside of their party lines, we don't need people mocking free thought


Been off the politics tab for a while, huh?
 
2013-01-04 06:00:46 PM  

Gdalescrboz: Irving Maimway
But haven't Fark IndependentsTM been telling us all year that we're going to end up like Greece? I had said you couldn't compare us because unlike Greece we issue our own currency but was told that was not the case at all and I was really confused and uneducated

I know you think you are being cute by calling republicans "fark independents" but there are some of us that really do pride ourselves on independent thought, we kindly ask you to stop using "independent" in a derogatory way. We struggle as it is to get people to think outside of their party lines, we don't need people mocking free thought


I know I feel sorry for you guys but its much too late. Disaffected Republicans are joining your ranks like flies. Youre going to have to find your self a new party. This one has been crashed. Sorry for your loss.
 
2013-01-04 11:22:47 PM  

stratagos: I'm still unclear where the Fark Economist Posse thinks Greece should have gotten funds - they were (and are) spending more than they take in. Is the magical Euro fairy just going to sprinkle money into the treasury?

Of *course* the economy slows when you take a huge chunk of money out of it, duh. Same thing will happen in the US eventually - whether spending is tightened / taxes increased now or in fifty years, there comes a point where you can't keep spending an extra trillion bucks a year.

Difference of course being people will still loan us cash, because we're still good for it - and people won't loan to Greece, because they're not

The theory is that we can just create currency to prop up a receding economy and then soak the currency back up later on, after the economy is thriving. The problem with that theory is that it only works halfway. We can certainly stimulate an economy by injecting currency, we all know this.

The second half never worked, though. There is no will to remove the currency from the economy.

The propensity is for politicians and money masters to stimulate and stimulate. This is why we are so far in debt. Because there is no political will to stop spending.

What the math says is that it works, but the math ignores the fact that markets are driven by humans, and humans are not driven by mathematical models.

The economy is far more complicated than this model takes into account. (no pun intended)
 
2013-01-05 01:13:52 AM  

thrgd456: stratagos: I'm still unclear where the Fark Economist Posse thinks Greece should have gotten funds - they were (and are) spending more than they take in. Is the magical Euro fairy just going to sprinkle money into the treasury?

Of *course* the economy slows when you take a huge chunk of money out of it, duh. Same thing will happen in the US eventually - whether spending is tightened / taxes increased now or in fifty years, there comes a point where you can't keep spending an extra trillion bucks a year.

Difference of course being people will still loan us cash, because we're still good for it - and people won't loan to Greece, because they're not
The theory is that we can just create currency to prop up a receding economy and then soak the currency back up later on, after the economy is thriving. The problem with that theory is that it only works halfway. We can certainly stimulate an economy by injecting currency, we all know this.

The second half never worked, though. There is no will to remove the currency from the economy.

The propensity is for politicians and money masters to stimulate and stimulate. This is why we are so far in debt. Because there is no political will to stop spending.

What the math says is that it works, but the math ignores the fact that markets are driven by humans, and humans are not driven by mathematical models.

The economy is far more complicated than this model takes into account. (no pun intended)


We're so far in debt because Bush put trillions on the credit card while cutting taxes at the same time. CBO projection when Clinton's second term was finishing up was that the debt would be retired by the end of the decade. Projections are rarely right that far out, but at least Clinton had the trajectory going in the right direction.
 
2013-01-05 01:33:53 AM  
I didn't understand any of that...is this kind of like the laffer curve but with austerity?
 
2013-01-05 06:35:38 AM  
The United States Of Delusion

The irony is that clinging to delusion rather than face the necessity of deep cuts in borrow-and-squander budgets will lead to the involuntary reset of the entire system, depriving every vested interest of their share of the swag.

We are living in the United States of Delusion. The delusion has four key sources:
1. We can borrow-print-and-spend our way to prosperity when debt and fiscal/monetary stimulus are yielding ever more marginal returns:

The Dangerous Blindspots of Clueless Keynesians (January 2, 2013) The Keynesian model is a Cargo Cult, mired in a distant, romanticized past where Central Planning, intervention and manipulation were solutions rather than the root of the economy's fatal disease.

2. The risks of this fatal fiscal delusion are masked by a complicit Mainstream Media and a perception-management, manipulation-dependent Central State and Federal Reserve.

Spoiled Teenager Syndrome (January 3, 2013) Masking risk, cost and consequence creates an illusory world that eventually crashes on the unforgiving rocks of reality.

Is masking risk, cost and consequence a strategy that leads to success? No; it is a pathway to repeated catastrophic failure. What is the Central Planning strategy being pursued by our Central State and the Federal Reserve? Masking risk, cost and consequence.
3. The true costs of the Neoliberal Cartel State are cloaked, massaged and distorted by bogus budgets and wildly unrealistic projections.

Sickcare Will Bankrupt the Nation--And Soon (March 21, 2011)

Sickcare is fundamentally a system of interlinked politically powerful cartels.Insiders who refuse to speak on the record for fear of antagonizing the powers that be, exorbitant price increases, confidential agreements and a tug-of-war between warring tribes. Is this the Mafia we're talking about?
From the point of view of investigative journalism, it could al
so describe America's health care industry. Stated truthfully, the industry is a highly profitable and politically powerful group of companies which operate in cartel-like fashion: that is, they use their clout to limit competition and establish highly profitable pricing.
Western Pennsylvania has about 140 MRI machines, while the 32 million residents of Canada share 151 MRI machines. And the U.S. machines are getting a lot of use: the number of CT and MRI scans (scans other than old-fashioned X rays) tripled from 85 to 234 per thousand insured people since 1999.
While proponents are quick to note that scans are cheaper than the alternative diagnostic procedures, one firm's research found that a doctor who owns his own machine is four times as likely to order a scan as a doctor who doesn't.
As if that wasn't enough to highlight the self-serving nature of "fee for service" cartels, MRI scanner manufacturer General Electric waged a two-year lobbying campaign to roll back cuts in Medicare reimbursements for scans. While the effort proved unsuccessful due to the intense political pressure to reduce soaring Medicare costs, critics observed that providers simply made up the reduced reimbursements by increasing the number of tests administered.
The only solution that actually addresses the systemic problem is to get rid of the entire fee-for-service structure and break up the cartels.Healthcare must be reconnected to diet, nutrition, fitness, lifestyle and community, and to education and emotional well-being.
If You Want Solutions, First Pin Down Where the Money Is Going (May 23, 2011)

If you really want a solution, then start by pinning down exactly who's getting all the money. Then find out if they're accountable for how it's spent. Nobody wants to admit the reality: our nation is dominated by cartels and fiefdoms serving entrenched constituencies whose budgets are simply not sustainable.Please consider this chart of the University of California system's employment of professors and administration. If we extrapolate the lines, then soon there will be more highly-compensated seat-warmers in administration than there will be professors teaching in the classrooms.

www.oftwominds.com

It seems that some members of the Education Cartel and Fiefdom came to do good but stayed to do well--as in triple the national median earnings of full-time workers:
(Source: www.championnews.net/ftf_teacher.php?tid=78195&year=2010)
Salary: $172,163
Position: High School Teacher
Full/Part Time: Fulltime
Percent Time Employed: 100%
Assignment: Physics (Grades 9-12 Only)
Years Teaching: 30.5
Degree: Master's
Salary: $163,526
Position: High School Teacher
Full/Part Time: Fulltime
Percent Time Employed: 100%
Assignment: Driver Education
Years Teaching: 32
Degree: Master's
And how about those pension and retirement costs? We have an answer for New York City, and it is sobering. NYC budget - pension costs skyrocketing:
Over the past decade, New York City hasn't really grown its population but has increased expenses from $28.8 billion to $49.7 billion. The vast majority of that $20.9 billion increase has been in the form of more dollars to fewer employees. Pension costs are killing us most: this has grown from $1.3 billion in 2002 to $8.3 billion in 2012.
That's a 638% increase in pension costs in one decade, while the city budget leaped 72% despite a stable population. The share of the budget devoted to pensions jumped from 4.5% in 2002 to 16.7% in 2012.
I have addressed these issues many times, for example in The Devolution of the Consumer Economy, Part II: Rising Costs, Declining Wages (April 8, 2011) and Complexity: Bureaucratic (Death Spiral) and Self-Organizing (Sustainable) (February 17, 2011).

I have highlighted the Education and Sickcare Cartels, but there are many others with exploding costs and zero alignment with accountability or performance. The Department of Defense, famous for routinely losing track of hundreds of billions of dollars (and does anyone lose their job over that gross mismanagement? No, everyone gets a promotion and raise for doing such a swell job), manages to triple the cost of every weapons system, regardless of the actual performance benefits (increasingly marginal, perhaps?)

The new F-35 fighter aircraft cost $150 million each, once we add in the overruns, replacing the Super Hornet F-18 E/F that cost $57 million each. (Once lifetime costs are included, the F-35 will cost upwards of $300 million each.) Is the F-35 really three times better than the F-18? Which would a commander facing 100 bogeys rather have, 30 F-35s or 90 F-18s? (I suspect they'd take the 90 F-18s, as long as they were loaded with the latest Sidewinder and long-range air-to-air missiles. As has been famously pointed out, at some point quantity becomes a winning quality.)

Will 100 F-35s prevail over 1,000 dirt-cheap drones? How about 10,000 drones? If the future of warfare is increasingly powerful unmanned networked drones (and it clearly is), why are we spending $1 trillion+ on hyper-costly aircraft that are essentially designed for a previous era?

4. The consequence of substituting delusion for reality is ignored or hidden from view, with the complicity of all the self-serving, entrenched vested-interests.

Is there any evidence that continuing to borrow and squander money on diminishing returns will magically cause a sudden return to productive investment? Of course there isn't; the magical belief that doing more of what has failed will eventually evade causality is delusional.

Does anyone seriously think that counterproductive "investments" in diminishing returns will "grow our way out of debt"? Of course not; everyone with a vested interest in the crumbling Status Quo is terrified that their share of the borrowed/printed swag will be cut. So the only alternative is to cling to a delusional state where belief in the impossible replaces a realistic assessment of risk, cost and consequence.

The irony is that this strategy of clinging to delusion rather than face the necessity of deep cuts in borrow-and-squander budgets will lead to the involuntary reset of the entire system, depriving every vested interest of their share of the swag. Is delusion a sustainable state? No. Thus we can confidently predict that causality, factuality and karma will eventually sweep aside delusion and all those who cling to it.

http://charleshughsmith.blogspot.com/2013/01/the-united-states-of-del u sion.html
 
2013-01-05 06:45:11 AM  

NewportBarGuy: I think that's 13,783rd time the Republican Economic Model has been blown out of the water.


No, it's the 13,783rd time that idiots in the press (and repeated here) don't understand the purpose of cutting government spending and/or lie about it. Of course it's going to throw people out of work, but those people weren't producing anything for the economy in the first place. This ignorance goes hand-in-hand with not understanding that GNP and GDP are horrible (and misleading) ways of measuring an economy.
 
2013-01-05 06:50:20 AM  
Anyways, all those articles aside, we're living in a time of delusion. We really are.

The country continues to spend massive massive amounts that currently never look like it'll ever be paid back, our debt to GDP ratio is now about 103%, by far the highest debt we've ever had during peace time, and will probably never get paid back except through a complete system reset, probably involving massive conflicts and war.

Food prices are spiking this year due to drought; however, remember that we've been at a food deficit the last 6 of 11 years. Its like watching a train wreck in slow motion, where anyone with half a brain can see it coming except for the naive retards watching from the sideline who are completely disconnected with reality. Many of them people who post here.
 
2013-01-05 06:52:57 AM  

Grand_Moff_Joseph: In other words, Krugman was right again?


As were all the Austrians. Where Krugman was wrong, and the Austrians correct, was that Krugman didn't see, for the last few decades, that this would have to be done, eventually, or that, if it had been done decades ago, it would have been a lot less painful. He didn't see the falling brick until it landed on his head. The Austrians have been watching it fall for a long time, and Krugman's been laughing at them and calling them ignorant. There's just no way to look at the situation honestly and say, "Krugman was right."
 
2013-01-05 07:04:51 AM  

imontheinternet: Wait... so, slashing budgets and firing everybody during hard economic times is a bad thing now?


It is if the people are not producing anything of economic value. The best year-over-year gain the US economy had in its history was 1946. That's right... the year that saw more government employees laid off and more government contracts cancelled than any other year (tens of millions of jobs lost). Think about it.
 
2013-01-05 07:08:23 AM  

Coming on a Bicycle: stratagos: I'm still unclear where the Fark Economist Posse thinks Greece should have gotten funds - they were (and are) spending more than they take in. Is the magical Euro fairy just going to sprinkle money into the treasury?

Eh yeah it does. If you allow it to be printed. But if the Northern countries (of which I am a member) call your bluff on this and say: not gonna happen we like our pensions and savings, then this is the result.


At least you are honest enough to admit that bailouts merely move wealth from Place A to Place B, and don't really boost the overall economy.
 
2013-01-05 07:10:11 AM  

Carth: hasty ambush: NewportBarGuy: I think that's 13,783rd time the Republican Economic Model has been blown out of the water.

Yup, because massive government spending has been so successful in Japan. Well if by successful you mean continuing recessions and a National debt exceeding 200% of their GDP then yes successful.

You mean Japan the country that recently topped the healthiest country list with the highest life expectancy, Japan the third largest economy in the world with an unemployment rate of 4.1%... that Japan?


You forgot, "the Japan that's entering its third 'lost decade.'"
 
2013-01-05 08:33:02 AM  

CPT Ethanolic: ...because it did not fully understand how government austerity efforts would undermine economic growth.

  So, in other words, the head economist at the  International Monetary Fund knows less about economics than I do?


No, they're talking about factors you don't even know the words for.
 
2013-01-05 09:25:29 AM  
This is a brilliant piece of propaganda. Central Planners are trying with all their might to force people into behaviors and financial assets that are in direct contrast to their logic as well as long term financial well being. This is the height of immorality, not to mention hubris. In the end, there is no chance of any of this working as the reality on the ground will overwhelm all of the manipulations and lies of the corrupt oligarch class.

From the Washington Post/Bloomberg article "Almost All of Wall Street Got 2012 Wrong as Markets Saved World":

Blankfein was more prescient. "I tend to be a little more positive than what I'm hearing from other people," the 58-year- old CEO told Bloomberg Television in an April 25 interview at Goldman Sachs's New York headquarters. "One of the big risks that people have to contemplate is that things go right."
Well of course Mr. Blankfein was optimistic. He knows he has the Treasury Department and the Federal Reserve in his back pocket and they will do whatever he says with one phone call. Furthermore, if things go wrong you just get a bailout. Crony Capitalism 101. That's how the World's 100 Richest People Got $241 Billion Richer in 2012.

Stocks rose as Federal Reserve decisions to keep benchmark interest rates at record lows while buying more than $80 billion a month of mortgages and Treasuries boosted confidence in the economy.

"In general they're trained to analyze the economic data, balance sheets and so on. They're not trained to predict political decisions. These factors have ruled the lives of fund managers in a more significant manner than what used to be over the past 20 or 30 years."

The paragraph above pretty much sums it up. There are no markets, there are manipulations. As for the nonsense going around yesterday about a Fed exit, this is what I tweeted:

There is a 0% chance of any FED exit ever. This entire experiment ends with civil unrest and martial law. That is the exit strategy.

Liberty Blitz

Bloomberg Full Article
 
2013-01-05 12:27:35 PM  
Greece should have never been accepted in to the Euro. They didn't qualify. It was the helpful bankers from The City (namely, Goldman Sachs) who helped them hide their debt in obscure bonds. When these derivatives decoupled their rates exploded, and the couldn't afford the resulting fees to the banks.

The world of Finance got the world in to this mess.
 
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