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(CNBC)   Paul Krugman doesn't want Latvia to succeed if it proves him wrong   (cnbc.com) divider line 30
    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 05:40:58 PM
6 votes:
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?
2013-03-15 11:11:08 PM
4 votes:

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 08:23:28 PM
4 votes:

cman: 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?

Would you as a lobster like to be cooked alive in serious pain or do you prefer being dropped in already boiling water that will end it all quick?


Your analogy would be apt if our economy were shrinking at 2% per year, but it's not -- it's growing.  We saved the lobster and allowing it to slowly heal, while Latvia's lobster is crippled for life but is learning to get around surprisingly quickly on its claws.
2013-03-15 06:05:11 PM
4 votes:
a 24% GDP drop is farkING CATASTROPHIC, it is factors higher than the US recession.

There'll always be a bounceback after a drop like that and at only 5% it's not yet anywhere close to the size it was pre recession yet.

But I'm glad the econofarkwits are looking at data now. It's a good start. Maybe you could explain the impact of austerity on Greece, Portugal, the UK and Spain.
2013-03-15 10:06:52 PM
3 votes:

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.
2013-03-15 09:12:10 PM
3 votes:

HempHead: The WindowLicker: GoodyearPimp: Yeh guys.  Let's idolize... Latvia.

While I can't comment on the other aspects of the story, one interesting aspect is that the Latvian currency (LVL) has been pegged to the Euro for over 7 years now.  They did not inflate it during the 2008 crash.  This provides an interesting contrast for other european union contries that very likely would have inflated their currencies if they had the option.  (I am looking at Greece here).

/these are strictly my personal opinions.

[blogs-images.forbes.com image 709x437]
On the other hand a large portion of the country left. The ones that left were almost exclusively those adults under the age of 30.

A lost generation.

But at least the bankers got all their money.


How can a country lose 7% of its population in one year? That's insane. That's as if 25 million Americans left in a single year.
2013-03-15 07:10:49 PM
3 votes:
Any policy that requires your young educated citizens to flee in droves is not a success story.
2013-03-15 06:00:21 PM
3 votes:
"We're looking at a Depression-level slump, and 5 years later only a partial bounceback; unemployment is down but still very high, and the decline has a lot to do with emigration. It's not what you'd call a triumphant success story," he continued.

Leaving the country to find a job is a sign that austerity measures work. Got it.
2013-03-16 12:25:30 AM
2 votes:

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....
2013-03-15 10:06:57 PM
2 votes:

DamnYankees: HempHead: The WindowLicker: GoodyearPimp: Yeh guys.  Let's idolize... Latvia.

While I can't comment on the other aspects of the story, one interesting aspect is that the Latvian currency (LVL) has been pegged to the Euro for over 7 years now.  They did not inflate it during the 2008 crash.  This provides an interesting contrast for other european union contries that very likely would have inflated their currencies if they had the option.  (I am looking at Greece here).

/these are strictly my personal opinions.

[blogs-images.forbes.com image 709x437]
On the other hand a large portion of the country left. The ones that left were almost exclusively those adults under the age of 30.

A lost generation.

But at least the bankers got all their money.

How can a country lose 7% of its population in one year? That's insane. That's as if 25 million Americans left in a single year.




What is amazing is that anyone thinks it is a legitimate economic plan that could work any where else(especially in the US).
2013-03-15 09:56:52 PM
2 votes:

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.

That's not "living within your means", that's insanity.  And if you're still not taking in enough money to be floating after all of that, you're still not "living within your means" anyway.


This is perhaps the most intelligent argument against Austerity I've seen on Fark.

There's "living within your means" and "depriving yourself of everything except the absolute essentials that you need to survive". Austerity worshipers take it to a ridiculous extreme.

And the real scary thing is the people praising Austerity here in the US aren't even considering revenue increases to help pay off the debt faster.

All that cost cutting is practically worthless if you don't increase your revenue.

Do you not get a second job (increase revenue) if you are deep in debt?
2013-03-15 09:50:18 PM
2 votes:

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.

That's not "living within your means", that's insanity.  And if you're still not taking in enough money to be floating after all of that, you're still not "living within your means" anyway.
2013-03-15 09:37:25 PM
2 votes:

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


The impression I got when I read that article was that Scandinavian welfare states were bloated beyond all belief and as a result was gradually cut and privatized to make it more lean than it was before.

Unlike here in the US, the Scandinavians actually trust their government to provide basic services instead of treating it like some evil monolith like we do here in the States.

But it is still stronger than the US welfare state even in its lean form.

Feel free to correct me if I read this wrong.
2013-03-15 09:01:36 PM
2 votes:

The WindowLicker: GoodyearPimp: Yeh guys.  Let's idolize... Latvia.

While I can't comment on the other aspects of the story, one interesting aspect is that the Latvian currency (LVL) has been pegged to the Euro for over 7 years now.  They did not inflate it during the 2008 crash.  This provides an interesting contrast for other european union contries that very likely would have inflated their currencies if they had the option.  (I am looking at Greece here).

/these are strictly my personal opinions.


blogs-images.forbes.com
On the other hand a large portion of the country left. The ones that left were almost exclusively those adults under the age of 30.

A lost generation.

But at least the bankers got all their money.
2013-03-15 08:39:25 PM
2 votes:

douchebag/hater: Of course he doesn't because he's one of the biggest hack economists living.

Oh he has a Nobel Prize you say?

BFD so does Obama.


Winners of the Nobel Peace prize and the Nobel science prizes are chosen by two different committees in two different countries. Science prizes are based on actual proven accomplishments. Peace prizes are awarded based on what feels good to the committee.

But perhaps you could get someone intelligent who could explain Krugman's writings to you so you wouldn't have to parrot GOP derp points.

You must hate yourself.
2013-03-15 07:10:57 PM
2 votes:
Basic rule:  Look for austerity measures to take during a boom, not during a recession.  Duh.
2013-03-15 06:57:52 PM
2 votes:
5% economic growth coming off from a depression isn't exemplary, it's normal.  There's no evidence that austerity fixed everything.  And last I checked, Estonia's GDP was still at 90% pre-crash levels.
2013-03-15 06:31:48 PM
2 votes:
www.samruby.com
KRUGMAAAAAN!!!
vpb [TotalFark]
2013-03-15 06:24:52 PM
2 votes:
So this is the best that anyone can come up with?  Has anyone actually looked at Latvia's economy?  The IMF and EU bailout, and the internal devaluation?  Someone want's to emulate that?

If it wasn't for the fact that Ireland was the previous attempt to find an example of GOP style economic policy that worked I would be amazed.
2013-03-15 06:04:55 PM
2 votes:
Subby must be another of those magic republicans than can tell what a liberal or Democrat is thinking.
2013-03-16 12:30:51 AM
1 votes:

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.
2013-03-15 10:10:02 PM
1 votes:

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.
2013-03-15 09:29:12 PM
1 votes:

Krugman is perfectly willing to admit when he's wrong.

Readers sometimes complain about my frequent references to the things my friends and I got right, and others got wrong. But look, it's not ego (or anyway it's not just ego). Predictions are how you judge between models. If the world delivers results that are very much at odds with what your framework says should have happened, you're supposed to reconsider your framework - as I did, for example, after I was wrong about interest rates in 2003.
Problem for conservatives is that he's rarely mistaken.
2013-03-15 09:27:14 PM
1 votes:

HempHead: On the other hand a large portion of the country left. The ones that left were almost exclusively those adults under the age of 30.

A lost generation.

But at least the bankers got all their money.


There are some other major factors at work in Latvia that I will not comment on, but your graph hints at them a bit.

Not to imply that youth have not been disproportionately affected by the recession, but the economic situation is only one of many things in play.  Also, you see the same effect in the us, even during times of economic stability.  I grew up in Maine, like most of my generation, I then left the state.  Latvia is very similar to Maine or really any of the other states in the US that are dealing with brain drain.
2013-03-15 08:19:09 PM
1 votes:

relaxitsjustme: They seem fond of pink and little dogs.


I am guessing that is the Blond parade.  It is sort of a uniform.  Most of the dogs I have seen around are the german shephard or siberian husky type, but I suppose the little ones appeal to a certain subset.

It is a place where being an American is a definite plus.  Latvia as a whole did not enjoy the 50ish years of soviet occupation.  There is a large percentage of the population that likes us purely because we were opposed to the Soviet Union.  This is demonstrated in some interesting ways.   For example, Latvia has an extremely high operational tempo of deployments in support of OEF.

/personal views only.
2013-03-15 07:59:48 PM
1 votes:

The WindowLicker: Latvia also has some amazing women! All three of the Baltic States are really great places to visit.


And it only costs you $2.
jbc [TotalFark]
2013-03-15 07:03:54 PM
1 votes:
How is that any different than the current crop of Republicans not wanting this country to succeed?
2013-03-15 07:02:53 PM
1 votes:

GAT_00: And last I checked, Estonia's GDP was still at 90% pre-crash levels.


Let's stick to bashing Latvia.  Estonia has some incredibly hot women and shouldn't have to suffer a Krugman thread.
vpb [TotalFark]
2013-03-15 06:51:40 PM
1 votes:

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?


You aren't looking at it properly.  You just look at the growth and ignore the catastrophic depression.
2013-03-15 06:32:43 PM
1 votes:
Hurray, an autoplay video.  CNBC you are off my whitelist.
 
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