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(CNBC)   Paul Krugman doesn't want Latvia to succeed if it proves him wrong   (cnbc.com) divider line 96
    More: Obvious, fiscal adjustment, EU summit, Paul Krugman  
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3532 clicks; posted to Business » on 15 Mar 2013 at 6:21 PM (1 year ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2013-03-15 11:11:08 PM

jpo2269: Without getting too political, it does seem the Nordic version of austerity has worked.

http://www.economist.com/news/special-report/21570840-nordic-countri es -are-reinventing-their-model-capitalism-says-adrian


I'm sorry, that article reads as a bunch of ideological BS.

Firstly, that huge spike in Spending as a % of GDP has a lot to do with a recession Sweden had at the same time as it was heavily investing in its future.  Government spending as a % of GDP drops when your recession ends, and money you spent very intelligently starts to pay off.  There was no reduction in the "welfare state", if anything there was an expansion of the programs that worked well and generated all the economic activity.

The reason "Nordic Austerity" works is because it isn't austerity, it is spending your money very wisely on social programs with an eye on long-term returns.  That, combined with pragmatic government policy based on reality and not ideology, is what makes the Nordic countries so successful.
 
2013-03-15 11:22:15 PM
Mrtraveler01:

I do not think you are wrong in how you interpreted the article, I too had a similar reaction.  What I would say is this however: 1. the amount of debt the Nordic countries had compared to the US was much less then what we experience today and especially what the future holds minus any significant changes.

You correctly point out that the Nordic public are more willing to accept govt. involvement than us in the States.  However, the article does point out that the Nordic people will accept govt. involvement as long as it works... I would hope we could agree that if our govt. had a track record of successful programs, hopefully more people would "trust" the govt.

It seems to me that the Nordic people are more concerned with what works, as opposed to playing politics and unfortunately, there are two sides of America that are only concerned with politics regardless of the outcome.
 
2013-03-16 12:04:56 AM

Ishkur: billmarshall: "austerity" means living within your means. Why is that so wrong?

It's not, but there's something you need to understand about economies: They depend on money to move through various sectors to be healthy. If money is not moving, then that's bad. The economy crashes when the money slows down or stops moving.

Now, there are all sorts of reasons why the money would stop moving that I won't get into here. But the point is the only way to get the money to start moving again is to pour a whole bunch of it into the economy. And the only way to do that is to borrow and spend.

(there are qualifiers and variable to all this, yadda yadda...mileage varies, etc.. I'm just being really simplified here)

Austerity is the belief that, if the money slows down and the economy goes into the crapper, the only way to pull out of it is to reduce or shrink the various sectors -- in effect, take more money out of the economy. That's bad, because it means there is even less money moving around than before, which makes the economy even worse.


Then you just utilize some more austerity, libtardo.

Duh.
 
2013-03-16 12:24:08 AM

Mentat: Any policy that requires your young educated citizens to flee in droves is not a success story.


You mean getting rid of hipsters and other worthless Millennials isn't a success?
 
2013-03-16 12:25:30 AM

HempHead: billmarshall: "austerity" means living within your means. Why is that so wrong? They spent money they didn't have and then had to repay it by doing without.

Once the debt is under control they can spend again and the economy will grow.

imagine if instead of spending money on BS stimulus the government had simply borrowed HALF the moneyit borrowed, thinned out government waste and cut all taxes by 50%. as long as the tax savings was invested in america. they could have then phsed the taxes back in after two yearsd  and we would be on top of the world right now.

Krugmans theory only works if the government has cash to spend on infradtucure not if they have no source of revenue.

He is an idiot.

Imagine if the government spent $500 million on putting solar power on every house in the US instead of spending $2 trillion dollars invading Iraq/Afghanistan.


Imagine if the government had spent the QE money paying off people's mortgages instead of just giving the money to the banks and keeping the mortgages on the books....
 
2013-03-16 12:29:47 AM

jpo2269: Without getting too political, it does seem the Nordic version of austerity has worked.

http://www.economist.com/news/special-report/21570840-nordic-countri es -are-reinventing-their-model-capitalism-says-adrian


There's a reason why they are choosing 1993 as the starting point.
Wonder why?
That's when Sweden's Banking Crisis and housing bubble burst.
 
2013-03-16 12:30:51 AM

untaken_name: Mentat: Any policy that requires your young educated citizens to flee in droves is not a success story.

You mean getting rid of hipsters and other worthless Millennials isn't a success?


No, it isn't.
 
2013-03-16 12:35:37 AM
I am a used book dealer...

The average value of a Kurgman book: $0.01

I don't need new crap from this man to know it's crap.
 
2013-03-16 12:48:47 AM

nmrsnr: I'm no economist, but doesn't having your GDP drop 20% before rebounding with 5% growth sound like a much worse outcome than slow consistent GDP growth of ~2% until your economy recovers?


Yeah, but where would they get that slow and steady 2% growth from with their economy collapsing?

I the point of this is that their economy is growing because they fixed their problems.
 
2013-03-16 01:02:53 AM

wildcardjack: I am a used book dealer...

The average value of a Kurgman book: $0.01

I don't need new crap from this man to know it's crap.


Well, I'm convinced.
 
2013-03-16 01:28:09 AM

billmarshall: "austerity" means living within your means. Why is that so wrong? They spent money they didn't have and then had to repay it by doing without.

Once the debt is under control they can spend again and the economy will grow.

imagine if instead of spending money on BS stimulus the government had simply borrowed HALF the moneyit borrowed, thinned out government waste and cut all taxes by 50%. as long as the tax savings was invested in america. they could have then phsed the taxes back in after two yearsd  and we would be on top of the world right now.

Krugmans theory only works if the government has cash to spend on infradtucure not if they have no source of revenue.

He is an idiot.


It also operates on the theory that someone wants to buy your debt indefinately until the economy turns around. Easier for the US, but how long would a country like Latvia be able to do so? Not long. Who wants to buy bonds that payout interest rates that are lower than inflation? He's the new Adam Smith and that worked out so well for the common person.
 
2013-03-16 02:02:38 AM
Greece
 
2013-03-16 02:11:20 AM

Princess Ryans Knickers: Greece


That's the word
 
2013-03-16 02:22:42 AM

zerkalo: Princess Ryans Knickers: Greece

That's the word


And who would keep buying their bonds until they magically spend themselves out their current crisis? They are a solid B-.
 
2013-03-16 02:30:08 AM
Absolutism is stupid.  Krugman needs to chill out.
 
2013-03-16 02:30:54 AM

No doubt we'd all understand Latvia and Estonia better if someone, maybe someone on Fark, could explain this situation with an analogy.  Maybe an analogy involving the trading of coconuts and fish.  Or maybe digging ditches.  Or perhaps via the follies of building bridges.  If only we had someone like that.  On Fark.


www.gridirongenerals.com
 
2013-03-16 02:48:41 AM

KittyGlitterSparkles: zerkalo: Princess Ryans Knickers: Greece

That's the word

And who would keep buying their bonds until they magically spend themselves out their current crisis? They are a solid B-.


That's what you heard
 
2013-03-16 03:21:25 AM

IlGreven: billmarshall: "austerity" means living within your means.

Austerity means no outlays, period.  If you were a family, that means no phone, no cable, no internet (sound reasonable so far?), no gas, no electric, no water (not reasonable to you?), no rent, no mortgage, no car, no house (good luck finding a place to live and a way to work), no insurance of any sort, as little on food and clothing as possible.


Right, and this is why I find all this talk about "austerity" measures in Europe to be laughable, really.

I'll give you an example of true austerity from Ceausescu's Romania.
During the 70s, the West had a relatively positive view of Romania and Ceausescu, mainly because they saw him as a critical voice of Soviet involvement in Europe (see his reaction to the Prague spring etc.). As a result, Romania was able to borrow a sizable amount of cash from the West, which the Communist party promptly squandered away.
As a result, Ceausescu somehow decided that foreign debt is bad, and pretty much ran the country into the ground trying to pay back the entire debt in one decade (the 80s). That was true austerity: a great deal of what Romanians did produce was used to pay off foreign creditors. Meanwhile, food was rationed to the gram and most of the time you couldn't find it in stores anyway. Gas was rationed, electricity was rationed. You get the picture.
In the old hack's defense, by the time we killed him he had actually managed to pay back the entire foreign debt, but at what price?

What's going on in Europe right now is like a family taking a look at its finances, realizing that they're spending way more than they're bringing in, and deciding "okay no more iPhones for a while, I guess some Droids will have to do for now", reduce their deficit by a little bit, use that as "leverage" to get the bank to give them a little more time to pay back what they owe, and call that "austerity".

/ Oh, and someone mentioned that "austerity" measures need to be run during a boom, to pay for the recession. Good luck with that. If you're a politician anywhere in Southern Europe, you've just dynamited any chances you had of getting re-elected.
 
2013-03-16 03:22:44 AM

untaken_name: Mentat: Any policy that requires your young educated citizens to flee in droves is not a success story.

You mean getting rid of hipsters and other worthless Millennials isn't a success?


Even just a couple years ago, eveyone on fark was complaining about the boomer generation. Now they're complaining about "kids these days."

It makes me smile.
 
2013-03-16 03:34:15 AM

wildcardjack: I am a used book dealer...

The average value of a Kurgman book: $0.01

I don't need new crap from this man to know it's crap.


Are there any books about a boy wizard? Maybe a series that turned its author into a squillionaire?

Let's all write!

/Not a writer yet.
//Need a muse.
 
2013-03-16 03:59:13 AM
OMG krugman is a short sided buffoon.   He'd rather a country go bankrupt later than have it be financially stable in the long term while suffering a little in the current moment.
 
2013-03-16 06:43:36 AM
The contraction that everyone is talking about happened during a financial collapse, and Latvia's response was austerity. The Farkers who worship Krugman act as if the initial contraction was caused by the government's austerity measures. Krugman predicted that Latvia's response to the financial crises would lead to continued contraction for the country. It hasn't. Thus Krugman is wrong and the zombie of Brietbart is automatically king of the world.... or something.

Look, Krugman should never have made any predictions about Latvia, or it's economy. It's tiny; with a GDP of 27 billion dollars. Any number of factors can cause huge swings in it's economy. In other words, it's experience doesn't prove anything one way or another.

If Warren Buffet stopped in the country long enough to take a shiat, the GDP would go up by 1 or 2%.
 
2013-03-16 07:18:56 AM

BigBooper: The contraction that everyone is talking about happened during a financial collapse, and Latvia's response was austerity. The Farkers who worship Krugman act as if the initial contraction was caused by the government's austerity measures.


Well no, but if you have a 24% drop in GDP and your country isn't a smoking ruin or something, you're gonna see some improvement. Latvian economic policy could have been to buy everyone in the country a ticket to a Bonnie Tyler concert and they'd have seen that 5% bounce.

BigBooper: Look, Krugman should never have made any predictions about Latvia, or it's economy. It's tiny; with a GDP of 27 billion dollars. Any number of factors can cause huge swings in it's economy. In other words, it's experience doesn't prove anything one way or another.


100% true.
 
2013-03-16 08:06:57 AM

Gunther: BigBooper: The contraction that everyone is talking about happened during a financial collapse, and Latvia's response was austerity. The Farkers who worship Krugman act as if the initial contraction was caused by the government's austerity measures.

Well no, but if you have a 24% drop in GDP and your country isn't a smoking ruin or something, you're gonna see some improvement. Latvian economic policy could have been to buy everyone in the country a ticket to a Bonnie Tyler concert and they'd have seen that 5% bounce.

BigBooper: Look, Krugman should never have made any predictions about Latvia, or it's economy. It's tiny; with a GDP of 27 billion dollars. Any number of factors can cause huge swings in it's economy. In other words, it's experience doesn't prove anything one way or another.

100% true.


Kruggers put together a new chart showing the level of austerity to GDP.  Basically, there is a linear correlation more or less between austerity and GDP, 1% of austerity relative to GDP leads to a 1% drop in GDP.  Thus, this empirically disproves Paul Ryan and the other austerity pushers policies which claim that austerity leads to growth.  Totally, factually wrong, period.  This is all about how the 1% want to keep their 15% tax rate and push the cost of our debt onto the middle class.  We should have a national referendum to ask voters whether or not to save social security and medicare, to remove the limit on SS contributions, including forms of income (i.e. dividend income must pay the 12% in SS tax).
 
2013-03-16 08:20:08 AM
Oh so NOW it's ok to be like Europe? Farking Latvia?? Godammit, I wish all of you empty headed hypocrites would move there.
 
2013-03-16 08:32:43 AM
Who cares about Latvia either way? I'm not sure many accurate comparisons can be made between our economy and theirs.

The UK, on the other hand, is back into a double-dip recession thanks to Cameron's austerity.

http://www.bbc.co.uk/news/business-17836624
 
2013-03-16 08:46:45 AM

wildcardjack: I am a used book dealer...

The average value of a Kurgman book: $0.01

I don't need new crap from this man to know it's crap.


Perhaps if you stocked Krugman books instead of Kurgman books you might have better results. Assuming you really are a used book dealer. Reason I question it? Take a look at Amazon's Krugman pages, which are somewhat at odds with your valuation:

http://www.amazon.com/s/ref=nb_sb_noss_1?url=search-alias%3Dstripboo ks &field-keywords=paul+krugman

If you're selling them for 1 cent, you have to be the dumbest used book dealer in existence.
 
2013-03-16 08:49:55 AM

Northern: This is all about how the 1% want to keep their 15% tax rate and push the cost of our debt onto the middle class.  We should have a national referendum to ask voters whether or not to save social security and medicare, to remove the limit on SS contributions, including forms of income (i.e. dividend income must pay the 12% in SS tax).


^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ ^ ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

All for it, and it's even against my own interest, since I earn quite a bit in capital gains and dividends each year.
 
2013-03-16 08:57:47 AM
Yes, because an outlier always proves the rule.
 
2013-03-16 09:59:37 AM
Why does Fark hate Latvia?
 
2013-03-16 10:03:50 AM

Phil Moskowitz: Yes, because an outlier always proves the rule.


Just as much as one man's opinion does.
 
2013-03-16 10:54:29 AM

nmrsnr: I'm no economist, but doesn't having your GDP drop 20% before rebounding with 5% growth sound like a much worse outcome than slow consistent GDP growth of ~2% until your economy recovers?


Either way - it's a country the size of a postage stamp, with an economy a fraction of the size of that of the county* I live in. Why anyone thinks this sort of thing is scalable is a mystery to me.

*No, I did not misspell "country".
 
2013-03-16 11:05:26 AM

Zeno-25: Who cares about Latvia either way? I'm not sure many accurate comparisons can be made between our economy and theirs.

The UK, on the other hand, is back into a double-dip recession thanks to Cameron's austerity.

http://www.bbc.co.uk/news/business-17836624


I think the UK is going for the quadruple-lindy-dip recession - an extremely difficult move. It will impress the Austrian judges, however..
 
2013-03-16 11:16:54 AM

untaken_name: HempHead: billmarshall: "austerity" means living within your means. Why is that so wrong? They spent money they didn't have and then had to repay it by doing without.

Once the debt is under control they can spend again and the economy will grow.

imagine if instead of spending money on BS stimulus the government had simply borrowed HALF the moneyit borrowed, thinned out government waste and cut all taxes by 50%. as long as the tax savings was invested in america. they could have then phsed the taxes back in after two yearsd  and we would be on top of the world right now.

Krugmans theory only works if the government has cash to spend on infradtucure not if they have no source of revenue.

He is an idiot.

Imagine if the government spent $500 million on putting solar power on every house in the US instead of spending $2 trillion dollars invading Iraq/Afghanistan.

Imagine if the government had spent the QE money paying off people's mortgages instead of just giving the money to the banks and keeping the mortgages on the books....


So you want to give hand outs?  Instead of loans?  You'd have preferred the Fed make no money over the last few years?  And instead of handing the money to the treasury, (which by the way is not the banks), you'd have let the government not fund anything...

I just realized you have no clue what happens in QE.   I'm going to stop talking at you - I'd get better responses from a wall.
 
2013-03-16 11:27:29 AM
I find it telling that there are a multitude of reasons that Latvia's solution was a horrible idea, from the 24% contraction of their economy to a gigantic brain drain of younger Latvians, and the response is pretty much word for word "2% growth, Krugman is technically wrong, the best kind of wrong"

Yes, you can recover from shooting yourself in the foot. The idea is not to shoot yourself in the foot in the first place.
 
2013-03-16 11:32:34 AM

KittyGlitterSparkles: Phil Moskowitz: Yes, because an outlier always proves the rule.

Just as much as one man's opinion does.


When that one man has a Nobel Prize in Economics, his opinion carries more weight.
 
2013-03-16 11:36:38 AM
Speaking of austerity:

President Barack Obama told Senate Democrats that they should be open to changes in entitlement programs to achieve a long-term budget deal, according to several lawmakers who attended a meeting with him on Capitol Hill today.

The drive for American austerity is going on right now and our President is leading it.

Mind you, this is only weeks after the Democrats and Republicans worked together to prevent the Bush tax cuts for Billionaires from expiring.
 
2013-03-16 11:39:12 AM

nmrsnr: I'm no economist, but doesn't having your GDP drop 20% before rebounding with 5% growth sound like a much worse outcome than slow consistent GDP growth of ~2% until your economy recovers?


GDP is an indirect metric of an economy's health. It can and has been juiced (China) to give an appearance of a healthier economy.

The cult of the Holy Formulae are the predominant voices in economics though.
 
2013-03-16 11:47:53 AM

giftedmadness: He'd rather a country go bankrupt later than have it be financially stable in the long term while suffering a little in the current moment.


Austerity is not "suffering a little" and anyone who tries to convince you otherwise doesn't know what they're talking about.

Austerity is nothing to take lightly and the people who think that going through Austerity is simple and painless is a fool.
 
2013-03-16 11:49:14 AM
I remember Estonia's president getting in a tiff with Krugman ... so are all these Latvian immigrants helping the Irish economy again?
 
2013-03-16 12:32:57 PM

Speaker2Animals: wildcardjack: I am a used book dealer...

The average value of a Kurgman book: $0.01

I don't need new crap from this man to know it's crap.

Perhaps if you stocked Krugman books instead of Kurgman books you might have better results. Assuming you really are a used book dealer. Reason I question it? Take a look at Amazon's Krugman pages, which are somewhat at odds with your valuation:

http://www.amazon.com/s/ref=nb_sb_noss_1?url=search-alias%3Dstripboo ks &field-keywords=paul+krugman

If you're selling them for 1 cent, you have to be the dumbest used book dealer in existence.


Hey!  You weren't supposed to check him - you were just supposed to take his bare assertion as fact!!!

/It's going to take decades before the right figures out that they can be fact-checked in an instant
//now don't go checking to see if he really is a used book dealer now
 
2013-03-17 04:49:44 AM
So were all the emmigrants the Russian transplans the commies brought in there?
 
2013-03-17 02:40:26 PM

fatalvenom: Why does Fark hate Latvia?


Because they can't find it on the map
 
2013-03-17 06:11:55 PM

Speaker2Animals: If you're selling them for 1 cent, you have to be the dumbest used book dealer in existence.


You beat me to it.  Note in particular the 40 offers for used Econ for $120+ each.  I was going to ask where his store was so I could make a fortune.
 
2013-03-18 11:50:30 AM

MadHatter500: untaken_name: HempHead: billmarshall: "austerity" means living within your means. Why is that so wrong? They spent money they didn't have and then had to repay it by doing without.

Once the debt is under control they can spend again and the economy will grow.

imagine if instead of spending money on BS stimulus the government had simply borrowed HALF the moneyit borrowed, thinned out government waste and cut all taxes by 50%. as long as the tax savings was invested in america. they could have then phsed the taxes back in after two yearsd  and we would be on top of the world right now.

Krugmans theory only works if the government has cash to spend on infradtucure not if they have no source of revenue.

He is an idiot.

Imagine if the government spent $500 million on putting solar power on every house in the US instead of spending $2 trillion dollars invading Iraq/Afghanistan.

Imagine if the government had spent the QE money paying off people's mortgages instead of just giving the money to the banks and keeping the mortgages on the books....

So you want to give hand outs?  Instead of loans?  You'd have preferred the Fed make no money over the last few years?  And instead of handing the money to the treasury, (which by the way is not the banks), you'd have let the government not fund anything...

I just realized you have no clue what happens in QE.   I'm going to stop talking at you - I'd get better responses from a wall.


Yeah trickle down.  Reagan is smiling from his grave.  Does your reply apply to the solar energy give away as well?
 
2013-03-19 07:14:19 AM

JasonOfOrillia: Hurray, an autoplay video.  CNBC you are off my whitelist.


THIS!

fark those things. man i hate that. i dont WANT to listen to some horrible journalist, i want to READ.
 
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