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Many of those European nations have unemployment rates as high as ours -- and the governments are feeding and giving free health care to their unemployed. That's not really austerity. Austerity means the people get off their hind ends and start working for a living.
You have no idea.
Unemployment figures in Europe vs in the US cannot be compared.
Using the the same method of analysis, unemployment here would be way over 20%.
Now, if you believe Europeans are just a bunch of lazy asses, it just shows you never walked far away from your native suburb.
Unemployment figures in Europe vs in the US cannot be compared.
I don't disagree with your sentiment, just your argument. An unemployment rate is an unemployment rate the percentage of a population whose working aged population is out of work.
If that population is 100, or 1,000,000, 10% is 10% and is directly comparable with any other population sample.
Did you miss Clinton's entire presidency? He did cut spending while in office. Take a look at how much GW added to the deficit with his spending and tax cuts he never paid for. Then 2008 happened, which if the government did nothing about, a recession would have happened that would have been much worse.
The housing crisis happened because the democrats wanted the poor, even if they were jobless to be a homeowner. 2 million mortgages never saw the first payment. Yet the poor lived in the house for years before the bank could move the house into foreclosure.
I just read an article which said that the whole foundation of the austerity mania, namely the assumption that exceeding 90% debt wall leads to economic problems, is based largely on calculation errors, which the authors of the original theory have even admitted
To begin with, you must understand how crisis in Europe started. It was not connected to subprime mortgages and real estate bubble, it was rather a result of never-ending spending and debt crisis. European countries had vast social welfare programs, huge unemployment benefits, they were subsidizing many businesses and organizations and provided free universal health care for all citizens. There were only few exceptions to those policies, one of them being Germany that suffered a major crisis in 2004 and implemented welfare cuts and burdened citizens with ~10% health care insurance tax. On the very other side of economic policy were Portugal, Greece, Spain and Italy - countries that have made exactly the same what Obama is trying to do with the US.
When crisis hit us in late 2009, it suddenly became clear those four countries (so-called PIGS) have no more money to spend not only on welfare but also on basic needs like police, army, health care or education. So they asked the European Union for help and EU (biggest money contributor to whom is Germany) agreed under some circumstances, including severe cuts in spending.
That spending affected Spain and Greece the most. Greece got almost bankrupt but in my opinion it's better to focus on Spain to show you how much was Spain similar to current USA few years ago. They have also had some kind of stimulus pack. Spain was benefiting money from EU (Cohesion Fund - money that wealthier EU members give poorer EU members to indicate growth there by investing in infrastructure and people) and spend that money on investments in infrastructure, which is exactly the same what Obama is doing now. Back then, it kinda worked - Spain's economy was growing. But when the crisis began, money stream stopped and Spain suddenly realized it has spend so much money wastefully. Right now there is over 30 new never-used airports in Spain! Can you imagine that? They've built over 30 airports where no single plane had ever arrived or departed. Some newly-built Spanish highways are closed because there is not enough traffic to maintain those highways. 40% of apartments in Spain is vacant now.
So to sum up, stimulus pack may be beneficial in a short term but in a long term it's gonna be destroying for the US economy. Austerity, on the other hand, is never beneficial in a short term (do you think German citizens back in 2004-2009 were not pointing on other countries and saying "look, they are doing better than us!") but in a long term it's inevitable.
Great post!
The situation in Spain is described in doc movie "Summer crisis"
It clearly shows how inefficiently and unproductively the money from gov't programs were allocated. And the worst thing is that a lot of that money was not just got by Spanish gov't through special EU funding but borrowed from German & French banks, which means first, they have to be paid back with the interest, and second, problems in Spain (and other PIGS countries) cause problems/collapse of financial institutions in creditor nations. YouTube
In Portugal we also have empty highways, mostly because people are not willing or simply don't have the money anymore to pay the tolls.
And we only have one failed airport, it is near a small town (Beja) in the middle of a lot of nothing.
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